This article was written and released on 26/3, please be aware of any subsequent government updates.
The Chancellor has recently set out a package of measures to support businesses in response to the uncertainty brought about by COVID-19.
Included in these measures is the introduction of the Coronavirus Job Retention Scheme (CJRS). In this post, you’ll find information about what the scheme entails and how it can help your business through this period of disruption.
What is the Coronavirus Job Retention Scheme (CJRS)?
The scheme’s aim is to enable you to continue to pay employees’ salaries for those that would otherwise have been laid off due to the crisis.
This requires team members to be transferred to ‘furlough’ status, meaning they are kept on payroll rather than being made redundant.
What do we know?
The scheme was announced on 20th March 2020. Many of the specifics are still to be ironed out - but what we do currently know is as follows:
- All UK businesses are eligible
- The government is reimbursing 80% of furloughed workers' wage costs, up to £2,500 per month. Businesses can choose to top up the additional 20% of their team member’s salaries, but that is at their discretion.*
- To be considered a furloughed worker, a team member must not be doing any work for you. The scheme does not apply to team members working reduced hours.
- If you have already made a team member redundant, you can write to them and change their status to furloughed.
- Information will need to be submitted to HMRC through an online portal (HMRC have yet to confirm exactly how this will work).
- Furloughed workers are still entitled to holiday sick pay and any other contractual benefits.
- The scheme is in place for 3 months, and backdates to 1st March 2020.
- It is likely the scheme will be reviewed ahead of its end date.
*Please note that it is likely that funds will be reimbursed in May 2020. If you have any other questions please follow the guidance supplied by the government - it is updated daily.
What are we still waiting to find out?
There are many questions we still do not have the answers to and need further guidance from the government. Here are a few:
- When will the CJRS start taking applications?
- Can a furloughed team member return to work for a period and then be furloughed again?
- Does a team member have to be employed on or before 1st March to be furloughed?
- Can employers defer paying furloughed team members until they receive funding?
- How will the CJRS work for team members on zero-hour contracts or with irregular salaries?
What shall I do next?
As we wait for further guidance from the government, you need to begin to make decisions based on your business’ individual circumstances:
1. Check if your employment contract allows you to lay off your team members
If you don’t have this agreement in place, you will need your team members to agree to take furlough leave. If there is a failure to reach an agreement, this could possibly amount to a breach of contract. However, in these unprecedented circumstances, you may find many of your team members will accept this offer over being made redundant or working reduced hours. You should explain that these measures are to avoid the potential closing of the business.
2. Identify roles in the business that could be furloughed
A fair approach is to have a ‘selection criteria’ to identify the team members impacted. A fair selection criteria would include things like:
- An employee’s skills or qualifications
- Their aptitude for their role
- Their historical standard of performance
- Their attendance or disciplinary record
- Their length of tenure at the business
For example, if you decide that 4 of your 6 software developers could be furloughed, then you would need to come up with a selection criteria to make a fair choice.
3. Liaise with impacted team members
We understand that time is of the essence here, and you will want to action this promptly. Therefore, you should liaise with impacted team members as soon as possible and gain their agreement - it is important to formalise this in writing.
You can download our furlough letter template to send to those team members being placed on furlough leave.
4. What if my staff don’t want to be furloughed?
If your team members don’t want to be furloughed, then you may have to go through the redundancy process. You can read more about the steps, including information on selection criteria mentioned above, on our blog post, Making someone redundant.
We would recommend you speak to a HR Professional, or our HR Advisors, before you continue with the next steps.