How does Coronavirus Job Retention Scheme operate?
- Certain workers will become “furloughed workers”.
- Furloughed workers cannot carry out any work for their employer while designated as furloughed, or a linked or associated organisation but they can do voluntary work as long as they are not providing services for or generating revenue for the employer or a linked or associated organisation.
- A furloughed worker can be furloughed part time and work the rest of the time.
- The furlough period begins when the employee stops work, not when agreement is reached.
- If furloughed employees are expected to do online training while furloughed they must receive the National Living Wage/National Minimum Wage for the time spent training.
- Workers must be told of and agree to this change in writing. This written agreement must be kept for five years as part of the scheme. The guidance has confirmed that collective agreement reached between an employer and a trade union on furloughing staff is acceptable for the purposes of making a claim under the scheme.
- However it should also be noted that this is a change in status and pay (if pay is not being topped up) and therefore subject to the usual employment law rules on changing terms and conditions.
- Changes to the contract must be made by agreement with the worker and the government guidance is clear that to be eligible for the subsidy employers must document their communication with the employee on being furloughed.
- You must confirm in writing that an employee has been furloughed, but that the employee does not need to provide a written response. Please note that this is for the purposes of making a claim under the scheme. Any reduction in pay must be agreed in writing under normal employment law principles and failure to do so may result in Employment Tribunal claims. You should not rely on a term in the employment contract to effect this change. We can advise you on how to document this properly.
- Employers must also keep a record of the agreement for at least 5 years.
- If employers have collective bargaining arrangements in place, they must agree this change with the union in the usual way.
- Collective consultation obligations may be triggered if there are 20 or more employees that are proposed to be dismissed and re-engaged in order to effect the change to terms to be furloughed. You should take advice if you think this may apply.
Related FAQs
We have teamed up with Scaleup North East to help companies impacted by the coronavirus outbreak plan how to get back to business.
Our specialist lawyers will provide a free “diagnostic” call with eligible businesses across the NE, exploring challenges they are facing in the aftermath of the lockdown, and identify specific steps to survive, and then thrive, in these challenging times and beyond.
Through the collaboration with Scaleup North East, eligible North East-based SMEs are then able to apply for up to 40% funding towards up to £4,000 of legal advice.
These might include:
- Employment issues, such as dealing with a phased return to work
- Measures to support cash-flow, such as amendment to terms of trading and debt collection procedures
- Renegotiations and amendments to contracts, and other advice about contracts with suppliers and customers to deal with consequences of Covid-19
- Managing property costs – review of leases, advice on break clauses and formalisation of any revised arrangements recently put in place with landlords/tenants
- Health and safety implications of return to work and social distancing
Find out more on our website or contact partner Damien Charlton. If you are not eligible because of location but are interested in the free “diagnostic”, please contact us.
Although an employer is obliged to conduct consultation “with a view to reaching an agreement”, it is not required to actually agree to any counter proposals made by the employee representatives. Merely to consider them in good faith.
One of the key legislative requirements of EMI is that the employee satisfies the working time requirement, which is that they work at least 25 hours per week in the company or, if less, 75% of the employee’s total working time. If the working time requirement ceases to be met, then there is a “disqualifying event”. That means that the tax benefits of EMI ceases. It may also mean that the option lapses, but that depends on the specific terms of the option.
An employee who has been furloughed is by definition no longer working 25 hours/week and therefore on the face of it, there is a disqualifying event. However, the Government has tabled an amendment to the Finance Bill currently going through Parliament providing in effect that time not worked because an employee has been furloughed counts as working time, both for determining whether the working time requirement is met initially and whether there is a disqualifying event. Provided this amendment is enacted, this should address the issue.
It really depends on what your measure of success is! We would suggest regular wellbeing surveys – if the results of wellbeing surveys suggest that the culture is becoming more open, more psychologically safe, if people are asking for help or referring colleagues to MHFAs as a safe and effective pair of hands – these would be strong indicators of success.
You will be eligible if you are a self-employed individual or a member of a partnership and you:
- have trading profits of up to £50,000
- earn the majority of your income from self-employment
- have submitted a Tax Return for 2019
- have traded in the tax year 2019/20
- are trading when you apply for a grant, or would be except for Covid-19
- intend to continue to trade in the tax year 2020/2021
- have lost trading/partnership profits due to Covid-19