FAQ’s Job Retention Scheme (JRS)
The following FAQ’s have been produced following an ACAS webinar.
What is the JRS?
The JRS is a ‘temporary’ scheme open to employers for at least 3 months starting on 1 March 2020. The JRS is designed to support employers who have been severely affected by Covid-19. There is no financial limit on what employers can claim.
How does the JRS work?
Employers can apply to HMRC for a grant to cover wages for their employees, which will cover the lower of 80% of the wages of retained employees to a maximum of £2,500 each a month plus employer’s National Insurance Contributions and employer’s minimum auto-enrolment employer pension contributions of 3%.
Do wages include fees, commission and bonuses?
How do employers calculate the wages of employees who work variable hours?
If the employee has been employed (or engaged by an employment business) for a full 12 months prior to the claim, the employer can claim for the higher of either: (a) the same month’s earning from the previous year; (b) average monthly earnings from the 2019-20 tax year. If the employee has been employed for less than a year, an employer can claim for an average of the employee’s monthly earnings since they started work.
Which employers are eligible for the JRS?
The scheme is open to all UK employers that had created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
Which employees can benefit from the JRS?
The JRS applies to employees who were on PAYE payroll on 28 February 2020 who are “furloughed” instead of being made redundant or laid off.
Is the JRS limited to certain types of employees?
No, it applies to all full-time employees, part-time employees, employees on agency contracts, and employees on flexible or zero-hours contracts.
Are self-employed contractors eligible for the JRS?
No, as they are not normally subject to PAYE. However, they may be eligible for the new Self-Employed Income Support Scheme or Universal Credit.
Is there a qualifying period that employees must be employed by their employer to be eligible for the JRS?
No, provided that the employees were on PAYE payroll on 28 February 2020.
Can employees who start their employment on or after 1 March 2020 be furloughed?
No, the JRS only applies to employees who were employed and on a PAYE payroll on 28 February 2020.
Can employees who start their employment on or before 28 February 2020 but are not paid until after 1 March 2020 be furloughed?
Possibly, but this is not clear from the guidance.
How long must employees be furloughed?
Employees must be furloughed for a minimum continuous period of 3 weeks.
Can employers rotate furloughed employees?
Yes, provided that the employees are furloughed for a minimum of 3 weeks at a time. In practice this means that employees can be furloughed (min of 3 Weeks) brought back and furloughed again at another time. An employee could be furloughed a number of times during the grant period.
Does the JRS apply to those employees who are on reduced hours, or working for reduced pay?
No, as they are still working and the JRS only applies to employees that are not working. Anyone who is furloughed cannot continue to do work for the company during the furloughed period.
Can employees that have 2 employers be furloughed for both?
Yes, there is no prohibition on an employee being furloughed by each employer.
Do employers have to top-up the difference between the grant of 80% of wages and a furloughed employees’ normal wages?
No, employers do not have to top-up furloughed employees’ wages by 20% of the wage costs. But they can do if they so wish.
Is the grant of 80% of wages subject to income tax, national insurance contributions and other deductions?
Will employers have to repay all grant payments?
No, the JRS is not a loan.
How do you apply for the JRS grant?
Applications for JRS will be through an HRMC online portal. The aim is that this will be completed by the end of April 2020.
Can furloughed employees work for another employer?
No, furloughed employees can do volunteering or training, providing it does not generate any money for their employer. If employees are required to complete online training courses while furloughed then they must be paid at least the National Living Wage/National Minimum Wage for the time spent training, even if this is more than the 80% of their wage that will subject the grant.
Will the grants be longer than 3 months?
Possibly. The grants will end on 31 May 2020, but the government has indicated that the JRS will extend beyond this date.
Does holiday accrue while employees are furloughed?
Will employees be entitled to receive their contractual benefits while furloughed?
Unless the government provides guidance to the contrary, employees will be entitled to receive their contractual benefits in the normal way unless there is a contractual provision indicating otherwise or the employees have agreed not to receive them.
Can employees on unpaid leave be furloughed?
No, unless they were placed on unpaid leave after 28 February 2020.
Can employees that on sick leave or self-isolating be furloughed?
No, but they can be furloughed when they are fit to return to work. However, employees who are shielding can be placed on furlough.
Can employers insist on employees being furloughed?
No, employers can only furlough employees if they have a contractual lay-off clause in their employment contracts. If not, they will need to comply with employment law.
What is the difference between lay-off and redundancy?
Lay-off is where there is a temporary cessation of work and employees are placed on a leave of absence. During this time, employees remain employed and their continuity of service is preserved. Redundancy is when then requirements of the business to perform work of a particular kind [in the place they were employed] has ceased or diminished and could result in dismissals. In either case, employers will need to comply with employment law.
How do employers furlough employees when there is no contractual right to do so?
Employers must comply with employment law when designating employees as furloughed (i.e. consult with their employees and seek their consent). Specific legal advice should be sought.
Can employers re-employ employees that have been dismissed by reason of redundancy and then furlough them?
Yes, provided the employees were on PAYE payroll on 28 February 2020 and their employment ended by reason of redundancy after this date.
Can employees demand to be furloughed?
Probably not, but employers should take care to ensure any furlough process does not discriminate against those with protected characteristics. Prioritising vulnerable workers is likely to be reasonable. Employers will need to comply with employment law. Specific legal advice should be sought.
Can employees refuse to be furloughed?
Yes, as the change in status is subject to existing employment law. If there is no contractual right for the employer to lay off, the employee could refuse to be furloughed and work under protest. The employee could then bring a claim for unauthorised deduction from wages each month. Employers will need to comply with employment law. Specific legal advice should be sought.
Can employees on maternity leave be furloughed?
The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed or electing to change to shared parental leave and then being furloughed. Employees on maternity (or similar) leave will continue to draw statutory maternity pay (or similar) payments if they are not furloughed.
Can an employer change an employee’s contractual terms of pay / hours of work / location / role to manage changes we’re making to cope with Covid-19?
All of these changes would constitute a variation of contract. The best way to make a change is to agree it with staff. If you impose a change without agreement this could constitute a breach of contract or wages claim that could be taken to an Employment Tribunal.
An employee’s dependent becomes ill and they need to take time off work to look after them, are they entitled to pay?
If their dependent becomes ill with suspected coronavirus and they live in the same household then they are required to self-isolate and are entitled to Statutory Sick Pay (SSP) during that time. If the dependent is ill for any other reason, then they are not automatically entitled to SSP. If your contract allows for additional payment you should follow that. Additionally, there is a right to a reasonable amount of unpaid time off for dependents.
What steps should be taken if you have an employee who falls into one of the designated vulnerable groups and is reluctant to come to work.
Employers have a duty of care at all times to take all reasonable steps to protect workers from injury and disease. Those who are classed as vulnerable workers should not be made to attend work if it is unsafe for them to do so. Government advice is that work should be undertaken at home where possible. If working from home is not possible, then it may be appropriate to furlough them, even while the business otherwise remains open. This would need to be agreed with a worker and an agreement drawn up in writing. If they are not in a vulnerable group and refuse to attend work where it is necessary, then normal disciplinary procedures apply.
Can employees be asked to use some of their accrued holiday entitlement whilst they are working from home to help manage the potential influx of holiday requests once work resumes?
Yes. An employer can ask employees to take holiday at points throughout the year to suit business needs. If an employer needs an employee to take holiday on certain dates, they should tell the employee at least twice as many days before as the number of days they need them to take. For example, an employer requires an employee to take 5 days of holiday, they should tell them this at least 10 days before the holiday starts.
New updates from government allow up to four weeks of unused statutory leave will be allowed to be carried into the next two leave years, easing the requirements on business to ensure that workers take statutory amount of annual leave in any one year.
Can an employer cancel employee’s booked holidays due to not having enough staff available to meet essential business needs?
Yes, however they must let staff know beforehand by at least the same amount of time as the amount they intend to cancel.
If an offer of employment has been made with a future start date e.g. in May, but now the employer find they would not be able to afford to employ them, can I withdraw the offer?
A contract of employment is formed and ‘starts’ as soon as an offer of employment is accepted, in return for consideration, such as pay/benefits. If a conditional offer is made, the employer will be entitled to withdraw the offer if the conditions are not met, without being in breach of contract. However, a contract is already formed when an unconditional offer is made and accepted or a conditional offer where all conditions have been met. To end the contract, notice will need to be given if contractual notice is due, but if statutory notice is all that you offer then no notice is due.