Daily Coronavirus Webinar: job retention scheme

Apologies for any sound issues during this broadcast. 

Our Daily Coronavirus Webinar on 27 March included our regular update from Dame Carolyn Fairbairn, as well as a special focus on the government's new Coronavirus Job Retention Scheme. We discussed a wide range of topics, and answered questions from the audience.

Overview:

• The government have now published fresh guidance for business on how the Job Retention Scheme will work in practice – an important step forward
• Three key areas to highlight:
  • Firms can claim 80% of wages up to a maximum of £2,500 per month plus the associated Employer NICS and minimum auto-enrolment employer pension contributions on that wage. That in effect raises the cap that the government has set to a maximum ceiling of £2,804 of total grant per employee
  • The government have also clarified the interaction between the scheme and the National Living Wage. The guidance from government is that furloughed workers are to be paid 80%, or a maximum of £2,500 of their salary (based on their usual working hours) even if this would be below the National Living Wage
  • Those in full-time and part-time contracts qualify, as do employees on agency contracts or on flexible contracts, including those on zero-hour contracts.

Key questions we answered:

1. What’s the latest on the Job Retention Scheme (JRS), and has the government clarified anything businesses were asking?

• For employees whose pay varies, the employer can claim for the higher of either: the same month’s earning from the previous year, or average monthly earnings for the year
• The guidance also clarifies that employers cannot partially furlough workers, employees placed on furlough cannot undertake work – i.e. provide services or generate revenue for or on behalf of their employer.
• And finally, we also now know that employers can choose some employees to furlough and not others.
• Employees who are furloughed can volunteer to help the effort to tackle this virus.

2. On the JRS, does employee holiday accrue during the furlough?

• Holiday will continue to be accrued while the individual is furloughed.
• Once the employer and employee have come to an agreement, all employment law will continue to apply during that arrangement.

3. How long can an employee be ‘furloughed’ for? Can employees roll on and off furlough?

• The minimum time for an individual to be furloughed is three weeks. Employees can be furloughed multiple times.

4. If you are the Director of a company, can you apply for the JRS?

• Being a Director or Manager of a company does not disqualify you from the JRS.
• In addition, Directors or Managers will be able to continue undertaking their statutory duties while furloughed, such as filling out company accounts etc.

5. Can you apply for JRS more than once?

• For the duration of the scheme, yes.
• Currently, the scheme is expected to run for at least three months. The Chancellor will then decide, at around mid-May, whether to extend it.
• In practice, this means that you can furlough an employee for the minimum three week period, bring them back on board, and if they decided to be furloughed again, you can approve that so long as the scheme is still operational.

6. Is the JRS portal open? How do employees apply for it?

• HMRC are working through the night to get the portal up and running.
• We expect it to be running from mid to late April.
• The government’s guidance sets out clearly what companies and employees need to have in place to make the claim.
• The key information companies will need is their PAYE reference number.

7. What happens to employees who joined the company’s payroll after 28 February?

• The JRS is only eligible for employees with a PAYE reference number before February 28^th.

8. Can a company reclaim holiday costs under the furlough scheme?

• The JRS grant only applies to the period that the individual was furloughed.

9. Can self-employed people apply for the JRS and continue to work? For example, conduct a few minutes of work (essential emails etc.) while on the furlough scheme?

• People cannot work for their employer while claiming furlough.
• Individuals may volunteer during this period, so long as it is in line with Public Health guidance.
• This scheme is designed for individuals who would otherwise have been made redundant.

10. On the broader economic context, how deep do you think the recession will be over 2020?

• It is very hard to say how deep the recession will be. We do not have sufficient economic data to make an adequate prediction yet.
• We are not just thinking about what we need now to get us through the next few weeks. We are also thinking about the long-term implications of the measures we are implementing today.
• As the economy recovers, we are also thinking about how we gradually remove the schemes that are being introduced. It is important to remember that when this crisis dissipates, there will likely be a surge in people returning to normal economic activity.
• Many of the world’s advanced economies are facing this together. This means that when we do emerge from this crisis, we will do so together.
• In addition, Asia emerging out of this crisis will help to get goods through the supply chain.

11. What is the role of the CBI in the next phase and what is the CBI’s agenda for next week?

• The CBI has three key priorities for next week.
  1. The implementation of the announcements this week and making sure they are operational as soon as possible.
  2. Getting more guidance on support for businesses that need to stay open.
  3. More clarity around the support available to mid-sized businesses. We are working with the Treasury on this.
• The CBI is formalising its relationship with its trade association members, putting in place a structure to ensure our collective voices are fed directly to Number 10.