Work and Coronavirus: Furlough
Answers to frequently asked questions about the impact of the COVID-19 on the workplace.
What is Furlough?
The government has introduced the Coronavirus Job Retention Scheme (“CJRS”) in response to the current coronavirus pandemic. The idea of the scheme is to avoid employers making staff redundant and to enable them to continue paying wages in full during the crisis period.
The CJRS allows an employer to “furlough” staff who would otherwise have been dismissed or made redundant due to coronavirus. Furloughed staff are put on a period of leave during which they are not required to work for their employer. The scheme itself does not directly change the employment relationship between employer and employee. Rather, it allows the employer to agree with employees that they will be put on temporary leave of absence (furlough). The CJRS then allows the employer to recover a proportion of pay from HMRC in respect of employees on that leave.
If I am put on furlough, do I have to take a pay cut?
The CJRS will reimburse an employer for the salary of each furloughed member of staff. However, the amount of the reimbursement is limited to either 80% of the employee’s wage cost or £2,500 per calendar month, whichever is the lower.
If the employer puts an employee on furlough, they must make up the difference in the salary themselves or seek an amendment to an employee’s normal terms and conditions of employment to reduce their wages to the reimbursed amount.
Whether your employer can impose the reduction of pay on you and whether you can refuse to accept the reduction in pay will largely depend on the terms of your employment and the wider circumstances of the decision. That being said, from a practical point of view employees are agreeing to a temporary reduction in their wages as the alternative may well be the termination of their employment by reason of redundancy.
What are the dates of CJRS?
The scheme is backdated to 1 March 2020 and open for at least three months. The Government have already stated it will be extended if necessary.
Who does the CJRS apply to?
The scheme covers employees or workers provided that they were on an employer’s PAYE payroll on 19 March 2020:
- Full-time employees.
- Part-time employees.
- Employees on agency contracts.
- Employees on flexible or zero-hour contracts.
- Apprentices (provided that they are paid at least the applicable apprenticeship national minimum wage rate for all the time they spend training).
- Employees who were made redundant, or left employment for any reason, since 19 March 2020 can qualify if they are re-engaged by their former employer.
- Office holders (including company directors).
- Salaried members of limited liability partnerships (LLP).
- Agency workers (including those employed by umbrella companies).
- “Limb (b) workers”.
As above, employees and workers are included, provided that they were on the employer’s payroll on 19 March 2020 and they are paid through PAYE.
(Please note, there are provisions for financial assistance to self-employed workers. This blog is restricted to employed workers and employees).
Can Lincs Law Employment Solicitors help you?
If you have questions about your employment or are concerned about what is happening in your workplace, please call for a free telephone consultation on 01522 440512. For more information about Lincs Law Employment Solicitors, please visit our website at www.lincslaw.co.uk
Sally Hubbard, Specialist Employment Solicitor
Lincs Law Employment Solicitors