The Coronavirus Job Retention Scheme (the “Scheme”) – what we know so far from an employee’s perspective.
What is it?
It enables employers to receive a grant from the Government to pay up to 80% of their employees’ wages or £2,500 per month, depending on which is the lower amount.
How long does this Scheme apply for?
It originally covered payment of wages for 3 months from 1 March 2020. The Government has said the Scheme will now be extended to the end of June 2020 as of 17.04.20. (please see update at the foot of this post)
Does it apply to me?
Yes – provided you are registered for and paid through PAYE.
It will not apply to self-employed individuals but it is unclear whether it applies to workers or agency workers. Nor does it appear to apply to you whilst you are on sick leave or in self-isolation as you are not working. It is not yet clear whether your employer can change you from being on sick leave to being designated as furloughed.
Why is this good for me?
Whilst some people can work from home relatively easily, there are others who can’t. The most obvious example being retail and hospitality workers. There is also the risk for those working at home that their work starts to dry up as people save their pennies to get through these tough times rather than paying for marketing advice or that online French lesson.
In these situations, your employer can ask you to agree to being furloughed, which means you remain on their payroll rather than having your employment terminated.
Do I have to agree to being furloughed?
Only if there is an express clause in your contract of employment allowing your employer to send you home without pay for a certain amount of time. This is also known as a ‘lay-off clause’.
If there is no such contractual clause or practice of laying off employees, then you do not have to agree. However, given the only other option available for your employer may be to terminate your employment it would seem sensible to agree!
Will I receive 100% of my wages?
If you are furloughed under this Scheme, then you should expect to receive as a minimum 80% of your basic pay. It is not yet clear whether car allowances etc or bonuses will be included.
The Government has said that in order for your employer to qualify for the grant (to reimburse 80% of your wages, up to the cap of £2,500 per month) they do not have to continue paying you your full salary. This means that they can ask you to agree to waive the 20% top up without losing their right to apply for the grant.
Some employment contracts may already contain a clause allowing your employer to reduce your pay during periods of temporary leave from work. In this case they will be able to ‘only’ pay you 80% of your wages without your consent.
If you do not have such a clause in your employment contract your employer should be wary of unilaterally reducing your wages to 80% without your consent as this would potentially give rise to a claim for unpaid wages. However, you may wish to think carefully before refusing to agree to the 20% reduction as the alternative may be redundancy.
Update 15.04.20: Employment Law Update: Firms to be able to start claiming furlough money from Monday 20th April 2020. The employee qualification date has just been moved to the 19th March 2020.
Update 17.04.20: The Government announces the extension of the scheme until the end of June 2020.
Sarah Twigger-Thompson – rhw Solicitors llp