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Employment Law and Coronavirus

Coronavirus Job Retention Scheme (Furlough Scheme)

  • the scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020. Employers can reclaim up to 80% of wage costs up to a maximum of £2,500 per month, plus the associated employer NICs and minimum auto-enrolment pension contributions on that wage.  Fees, commissions and bonuses are not included in any payments. Claims can be backdated to 1st  March 2020. The scheme is expected to be in place by the end of April.
  • any organisation can apply, including charities and public authorities. The government does not expect public sector employers to access the scheme provided central government continues funding employee wages. The scheme is only available for agency employees who are not working.
  • an employer can choose to top up to 100% of salary for those on the furlough scheme if the business has sufficient cash to sustain that payment.  Many individual employers may seek to renegotiate contractual terms with respect to salary at this time and ask employees to accept a 20% reduction in salary. From the employees perspective, this amounts to a unilateral variation of contractual terms and will be subject to their existing employment law rights. An employer needs to be aware of potential discrimination claims arising from their decision on who to offer furlough to.
  • to be eligible for the scheme an employee must have been on the payroll as of 28 February 2020. Anyone who was on the payroll on 28 Feb and has subsequently been made redundant can be re-employed and put on the scheme.
  • for employees whose pay varies, the employer can claim for the higher of (i) the same month's earnings from the previous year or (ii) average monthly earnings in the 2019-20 tax year.
  • individuals are entitled to the minimum wage for the hours they work. If they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on normal working hours, they will receive 80% as they are not working.  They are entitled to be paid National Minimum Wage for any time spent in training.
  • an employee must not carry out any work or make any money for their employer whilst on furlough leave. However, they are able to undertake training and do volunteer work during a furlough period.
  • furlough leave must be taken in minimum blocks of three weeks to be eligible for the scheme. However, the Guidance allows for the rotation of furlough leave amongst employees, providing each employee is furloughed for a period of three weeks.
  • Employers will be able to make a claim once every three weeks in respect of employees.
  • employees claiming sick pay or self-isolating cannot be furloughed until they have ended self-isolation or returned to work after the period of illness. Employees who are shielding can be put on furlough immediately.
  • employees on maternity leave can continue to claim Statutory Maternity Pay.  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.

Carry over of annual leave

The government has announced it is allowing workers to carry over up to four weeks annual leave into the next two leave years.  The forthcoming Working Time (Coronavirus) (Amendment) Regulations 2020 amend regulation 13 of the Working Time Regulations to allow workers to carry over holiday entitlement into the next two leave years, where it is not reasonably practicable for them to take some, or all, of the holiday they are entitled to due to coronavirus. The balance of 1.6 weeks' statutory leave will not be affected and can be carried over for one year by agreement

If you are an employer we can provide you with a Furlough Agreement for your employees and advise on a range of contractual issues arising from the Coronavirus outbreak.

If you are an employee and are unsure of your contractual rights and how these have been varied at this time please contact our employment lawyers for expert advice.


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