FAQs for employees on the Coronavirus Job Retention Scheme.
This information is intended as general guidance. It relates to a scheme which is not yet in operation. If you have any specific issues, we would strongly advise you to seek legal advice.
1. What are my employer’s options if they cannot trade and cannot afford to pay me?
Your employer can ask staff to agree to a reduction in hours and pay. They may also choose to make staff redundant. However, this would involve your employer paying sums of money by way of a redundancy payment and notice pay. Your employer may prefer to take advantage of the Job Retention Scheme announced by the Government on 20 March 2020.
2. What is the Job Retention scheme being offered by the Government?
The Job Retention scheme allows HMRC to reimburse 80% of furloughed workers’ wage costs. The purpose of the scheme is to allow employers to access support to continue to pay a substantial part of employees’ salary, who would otherwise have been “laid off” or made redundant.
3. What exactly is furlough?
It follows a term that is commonly used in USA, where an employer chooses to insist that an employee does not work.
4. Does the Job Retention Scheme apply to all employers?
All UK businesses are eligible, which includes limited companies, sole traders, charities and partnerships.
5. Are there steps my employer needs to take before moving to furlough, such as reduced hours / unpaid leave / required annual leave?
The Job Retention scheme does not require any prior steps. However, your employer may suggest other options if he wishes you to continue to work, but on reduced hours.
6. Does my employer have to furlough as an alternative to redundancy?
It is not essential that employers consider the option of designating employees as furloughed before deciding whether to make them redundant. However, it is likely to be regarded as good practice. Failure to do so could result in a finding of unfair case dismissal.
7. When does the Job Retention scheme come into force?
The Government has not announced an exact date for the scheme to up and running, but it is expected it will come into force over the course of the next few weeks. Payments from the scheme will cover wages from 1 March 2020.
8. What categories of employees can be furloughed under the Job Retention Scheme?
All employees, including those on zero hours contracts are likely to benefit. The scheme does not apply to those who are self-employed / independent contractors.
9. While Is there a minimum period of service needed to qualify for the Job Retention scheme?
There is nothing to indicate that employees have to have been employed before a particular date or for a particular period of time.
10. What does my employer have to do to take advantage of the Job Retention scheme?
Your employer has to designate you as being furloughed and tell you that this is the case to take advantage of the scheme. This means you will not be required to work.
11. How should my employer notify me that I am being furloughed?
Your employer should tell you that you are being furloughed, ideally in writing. Your employer should also confirm what level of income they intend to pay during this period.
12. My employer has already laid me off before the Job Retention scheme was announced. Can my employer retrospectively furlough me?
It seems likely that this can happen as employers can claim the grant effect from 1 March 2020, whereas the scheme was not announced until 20 March 2020.
13. How will my employer decide who is to be furloughed?
Your employer will no doubt consider which employees are able to continue to work from home or remain at work during this period, and those who are not. This could be because their job cannot be done at home or if there is not enough work for them to carry out at home. Your employer may therefore decide that some employees are to remain at work, and others designated as furloughed.
14. My colleagues have been furloughed but I am still required to work, can I insist my employer furlough me?
If you believe you should have been furloughed and you have not, you should ask your employer to explain why you have not. Ultimately, it will be for your employer to decide whether to furlough you.
15. Can I refuse to be furloughed and insist on working?
It will be extremely difficult to try to insist that you remain at work.
16. My employer has closed its premises and they will likely have to make redundancies and have told us they will not make use of the Job Retention scheme – can I force my employer to furlough me so that I can benefit from this scheme?
You cannot force your employer to take advantage of the Job Retention scheme. However, a failure by your employer to consider the scheme as an alternative may give you a basis for an unfair dismissal claim.
17. If I am made redundant, what am I entitled to?
You will be entitled to notice (either to work your notice period or be paid for this) and accrued but untaken holidays. If you have more than two years’ service you will also be entitled to a statutory or any contractual redundancy payment.
18. What benefit is there to my employer opting for the Job Retention scheme rather than making redundancies?
It is likely to be much more cost effective for your employer, at least in the short-term, to retain staff, other than very high earners, who would otherwise be made redundant and take advantage of the government scheme.
19. What personal information does my employer have to provide about me to access the Government scheme?
An online portal is going to be set up in order for employers to submit the relevant information to HMRC. This will include details of the employees who have been furloughed and their earnings.
20. How much will the Job Retention scheme pay out per month?
The government will reimburse your employer for 80% of your wages, up to a cap of £2,500 per month.
21. Is this cap of £2,500 net or gross salary?
The £2,500 cap will almost certainly be of gross salary.
22. Will I be paid by the Government or my employer?
It would appear the grant will be paid by HMRC to the employer. Therefore, responsibility for payment of wages will still rest with your employer.
23. What about tax, National Insurance and pension contributions?
This is likely to form part of the grant paid.
24. How quickly will the Government pay the money that is due?
The Government has suggested that money will be paid within a few weeks. However, there is every likelihood that it will take longer to process a very large number of claims.
25. I earn more than £2,500 a month – will my employer top up my salary?
It is open to your employer to decide if they wish to top up your salary. Under the scheme, there is no requirement on employers to top up the remaining 20% of salary. However, if your employer does not pay your full salary they will almost certainly be in breach of contract, which would give you the potential basis to raise a claim. Therefore, your employer should try to reach agreement with you if they will not pay the remaining 20%.
26. I do not want to agree to a lower salary of £2,500 per month, can my employer force me to take a reduced salary?
Your employer should seek to agree a reduced salary with you if they do not intend to top up your salary. If your employer forces you to take the lower salary of £2,500 you may have the basis for claims for constructive dismissal, breach of contract or unlawful deduction from wages.
We would recommend you take advice from an employment lawyer if your employer imposes a reduced salary without your consent. We can assist with this.
27. If my employer forces me to take a lower salary of £2,500 per month, can I lodge an Employment Tribunal claim against my employer?
You may have the basis for a claim against your employer, however we would recommend you take specific employment law advice in relation to the potential claims you may have.
28. If I agree to a lower salary of £2,500, is my employer obliged to increase my salary again when business resumes?
Yes, provided you agree to the reduction only during the period when you are away from work. As soon as you are no longer covered by the scheme, your salary reverts to normal.
29. How long will the Job Retention Scheme pay out?
Initially for three months from 1 March 2020 until 31 May 2020, however this may be extended by the Government.
30. Will I accrue annual leave when furloughed?
Yes, as you remain employed.
31. Is being furloughed similar to being on garden leave?
Yes, to the extent that you are not carrying out work. However, being on garden leave usually involves you being on notice of termination of employment, whereas furloughed employees are not on notice or carrying out work.
32. Can the period of being furloughed end as soon my employer decides?
33. Can I work for another business or carry out self-employed work when furloughed?
You remain employed by your employer whilst you are furloughed, therefore we expect your employer will instruct you not to carry out any other work. However, if you already have a second job, which you have been doing along with your existing job, there is no reason why cannot continue with that.
34. Can my employer furlough me, then bring me back to work, then furlough me again?
We not have sufficient information at this stage to establish whether this will be how the scheme works. However, there appears to be no particular reason why employers cannot bring people back or place them on furlough, if this is what needs of the business require.
35. Will the payment be calculated on the basis of my pay with or without overtime?
It is not entirely clear whether payment will be based on pay with or without overtime.
How can McGrade & Co. help?
As a firm of solicitors dealing only with employment law, you can be confident that we have a leading understanding of legal issues that arise in the workplace. Our specialised position is even more valuable at a time of unprecedented change in employment practices during the COVID-19 pandemic.
We advise on the full range of employment issues, from the stage of recruitment through to employment tribunal proceedings and appeals. We will ensure your case is dealt with as quickly and efficiently as possible.
Our priority is to resolve disputes quickly and to enable those involved to put the difficulties behind them. If you choose to instruct us, we will focus on how matters can be resolved. If we are asked to advise on a grievance, we will try to find a solution that avoids the need for employment tribunal proceedings, where possible.
If employment has come to an end, and we can negotiate severance terms that are acceptable to both parties, we will do so. If the matter can only be resolved by employment tribunal proceedings, we will use our experience and expertise to ensure your case is fully prepared and well argued before the tribunal.
To find out more about the particular services we offer and how we can help you, please contact us on 0141 221 4488.