With ongoing pressure on employers due to the continuing spread of coronavirus in the UK, we take a look at the Coronavirus Job Retention Scheme and what it means to furlough a worker.
What is a furloughed worker?
A furloughed worker is an employee that has been asked to take a compulsory leave of absence. This is due to:
- An employer not being able to cover staff costs due to economic hardship caused by the coronavirus pandemic.
- An employer not having a workload to allocate to an employee during the coronavirus pandemic.
The employee must be on the business' PAYE, and will have their working hours either fully or partially reduced. In both cases, the employee is not to be made redundant. When the time comes for the employee to return to work, they will return with the same employment status as they had previous to being furloughed, although they may be asked to undertake reasonably amended duties as required by the business at that time.
Flexibly-furloughed employees can work any amount of time, but cannot undertake any work during the hours that they've been recorded as furloughed.
What is the Coronavirus Job Retention Scheme (CJRS)?
With many businesses having been forced to close due to Government guidelines since the start of the pandemic, the Chancellor Rishi Sunak set out a package of support measures to help SMEs and other businesses through this period of ongoing disruption.
Included in this package is the Coronavirus Job Retention Scheme. Under the scheme, all UK employers can access support to help pay part of their employees' salaries to prevent employees having to be made redundant.
How CJRS works
The scheme allows employers to claim 80% of the furloughed employee's salary back from the Government while they are furloughed workers - up to a maximum of £2,500 per month per employee. Businesses can only claim for employees that were employed and on payroll on or before the 30th October 2020.
It's also important to bear in mind that if employers are already receiving public funds, they are expected to use them to cover staffing costs (such as wages) rather than also applying for the Coronavirus Job Retention Scheme.
The scheme has now been extended to run until the 30th April 2021, with the final date to submit a claim being the 13th of May.
How does a business classify an employee as furloughed?
Employers will need to assign their employees as furloughed and keep them employed by the business.
A Furlough Grant claim can only be made once every three weeks. For that reason, furloughed employees must be furloughed for a minimum of three weeks. A claim period must last at least seven days within the same month, and you can only make one claim for any period of time. Employees can be furloughed more than once, and there's no maximum or minimum number of employees who can be furloughed.
For a business to access CJRS they must:
1. Talk to all employees that they wish to classify as furloughed workers and make their intentions clear. This must be done in line with their contract of employment. The employer can select who to furlough but must be careful not to discriminate. Employees cannot demand to be furloughed.
2. The employer must outline that the furloughed worker will be kept on the employer’s payroll and remain employed while furloughed. It must be made clear that the employee isn't being made redundant.
3. No work must be undertaken by the employee on behalf of the employer for the hours they are recorded as furloughed.
4. Employees must be informed if the employer will fund the salary difference while they are furloughed. This is the employer's choice. If the salary is reduced, workers may be eligible for support through the benefits system.
5. Employers must keep employees informed while they are furloughed and identify when they will be due back at work as soon as this is known.
6. To access the Scheme, businesses will need to confirm with the employee in writing and submit the information of all employees that have been furloughed and their earnings to the HMRC.
For the purposes of transparency, a list of employers who claim for periods from the start of December 2021 will be published on GOV.UK, except in cases that are considered high-risk.
You can find more information about the Coronavirus Job Retention Scheme and how to furlough staff here.