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On Saturday 4 April 2020 the Government updated its guidance (for both employers and employees) on claiming through the Coronavirus Job Retention Scheme (CJRS).

  • What is the CRJS?
    The Coronavirus Job Retention Scheme (CJRS) is designed to support employers whose operations have been severely affected by COVID-19, by allowing employers to place employees on “furlough” (a leave of absence) and claim 80% of their monthly wages, up to a cap of £2,500 per month, back from the government.
  • Who does the CRJS apply to?
    The CJRS is available to all UK employers that:
    • had an operating PAYE payroll scheme on or before 28 February 2020;
    • are enrolled for PAYE online (prior to making a claim); and
    • have a UK bank account.
    Any UK organisation can apply under the CJRS, including charities, recruitment agencies and public authorities. However generally speaking where public sector organisations receive public funding and there is no interruption to that funding, the government expects employers to continue to pay staff in the normal way and not to apply for a grant for wages under the CJRS.
  • Which employees are eligible
    Furloughed employees must have been on the employer’s payroll as at 28 February 2020 for the employer to be eligible to recover their wages under the CJRS and can be on any type of contract, including employees on flexible or zero-hour contracts. The definition of employees is wider than the employment law definition and includes others who are paid through PAYE such as office holders and company directors.
  • Must an employee’s job otherwise be at risk?
    The original intention of the CJRS seemed to be for employees who would otherwise have been laid off without pay or made redundant. However, the most recent updated guidance (4 April 2020) reflects a general trend that we have seen towards wider eligibility. We now consider that provided an employer can demonstrate that their business was affected by the COVID-19 outbreak, and as such they needed to furlough staff, this will be enough. There is not a need for a clear redundancy situation.
    However, the position remains unclear where an employer is not generally furloughing staff because their operations are continuing (such as care, homelessness support and supermarket retail) and whether staff who cannot work due to having to shield or look after a shielder or have child care issues due to the COVID-19 crisis can be furloughed for that reason alone. Until the recent guidance it was considered by some commentators to be possible to furlough these staff even where their jobs were clearly safe and the business not obviously impacted by COVID-19. However, the recent guidance now states that in relation to shielders (or those who have to care for shielders) they can be furloughed 'where you would otherwise have to make them redundant'. Some commentators are of the view that this goes against the otherwise wider discretion that has been given to the employer elsewhere in the guidance and such requirement has not been mentioned as applying to those who have child care issues and so cannot work as a result. It is difficult to see that the government would have intended to treat such groups differently.
    Further clarity will certainly be needed on this specific issue and legal advisors and other interested parties are seeking that clarity from the government so it is hoped that this will shortly be resolved one way or the other.
    What is clear is that employees who are on sick leave or self-isolating (in line with PHE guidance) should receive Statutory Sick Pay (and company sick pay, if applicable) and can only be furloughed after their period of sickness absence or self-isolation has ceased.
  • What is the benefit?
    HMRC will reimburse 80% of the furloughed workers’ wages, up to £2,500 per month, plus the associated employer’s NI contributions and automatic enrolment employer pension contributions on the subsidised wage.
    If an employer chooses to top-up employees’ salaries in addition to the grant, employer’s NI contributions and automatic enrolment pension contributions on this top-up of salary will not be funded through the CJRS. Similarly, any pension contributions provided by an employer above the minimum mandatory automatic enrolment contribution will not be funded.
    The CJRS will cover the cost of wages backdated to 1 March 2020 and is initially open for 3 months (but will be extended if necessary).

ARAG works in partnership with Ashfords‘ solicitors, the content of this article was written by Ashfords‘ Employment Team.

Disclaimer - all information in this article was correct at time of publishing.