Rosemary Connolly LL.B., LL.M. Principal Solicitor Rosemary Connolly Solicitors Limited www.solicitorsni.net 1
The purpose of CJRS is to provide for payments to be made to employers on a claim made in respect of them incurring costs of employment of furloughed employees arising from the health, social and economic emergency in the UK resulting from Coronavirus and Coronavirus disease 2
➢ Introduced 20th March 2020. ➢ Covers: 80% of employee’s worker’s regular/normal wages up to £2,500 per month plus employers NIC contributions, employers automatic enrolment, pension contributions. ➢ The Scheme is a grant operated through the PAYE scheme aimed at retaining in employment employees who would otherwise be dismissed. ➢ It operates to effect a temporary variation of contract pertaining to cessation of work and reduced wages but all other statutory and contractual employment rights remain in place. 3
➢ Any employer who had in place at 19th March 2020 a PAYE scheme registered on HMRC’s Real Time Information System ➢ All UK employers large and small including charities, recruitment agencies (with PAYE workers) ➢ (To a limited extent) Public authorities ➢ Administrators (where a business has gone into administration) ❖ Coverage: Employees on the employers PAYE payroll on or before 19th March 2020 ❖ Period of Operation: 1st March 2020 to 31st July 2020 in its current form and with modifications which are still to be clarified but which will include employers sharing the cost from 1st August 2020 to 31st October 2020 4
“The CJRS applies to employees who have been asked to stop working but who are being kept on the pay roll, otherwise described as ‘furloughed workers’ ” “Work is anything that provides services to or generates revenue for an organisation (excludes training)” “If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme” 5
➢ Full-time ➢ Part-time ➢ Temporary ➢ (so-called) Zero hours ➢ Casual ➢ Agency Provided s/he is paid via PAYE It is this rather than the employee’s status which is important. 6
➢ Foreign National Workers ❑ Foreign National workers are covered by the Scheme and can be placed on furlough and a claim made in respect of their wages. ➢ Director Employees ❑ Salaried Directors, including Directors of personal service companies, can place themselves on furlough and recover 80% of their regular salary through the Scheme. ➢ Already dismissed Employees ❑ An employee whose employment was terminated since 28th February 2020 can be re- hired and furloughed. 7
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❖ An employee who has been instructed to cease all work in relation to their employment ❖ For a (minimum) period of 21 calendar days ❖ The instruction has been given by reason of “circumstances arising as a result of coronavirus or coronavirus disease” Note: ➢ The requirement to have ceased all work prevents an employee working for a person connected with the employer or “otherwise indirectly” for the employer. ➢ The employee must not provide services for or on behalf of the employer nor engage in any income generating activity for the benefit of the employer. ➢ However, the employee can engage in training and can engage in representative duties e.g. for the purposes of disciplinary and grievance hearings and/or collective consultation. 9
➢ Need to designate employees as furloughed and evidence consent ➢ HMRC require a written record of the designation of employees as furloughed to be retained for 5 years ➢ Employers should secure consent in writing to what amounts to a (temporary) variation of contractual terms and KEEP A RECORD ➢ Employers should use fair objective and non- discriminatory criteria to determine who should/should not be placed on furlough 10
➢ Unless the situation is one where an entire workforce is being furloughed then employers should determine upon AND KEEP A WRITTEN RECORD of the criteria applied in determining who should be furloughed. ➢ In some instances, the choice may be straight forward, for example, if some aspects of work are continuing but others are not then employees needed for the ongoing work will clearly be retained and those whose work has temporarily declined are likely to be placed on furlough. 11
➢ In larger companies a duty to consult about the decision to place numbers of employees on furlough may arise out of pre-existing agreements with Unions and/or employee representative groups. However, the Government guidance makes clear that (all) employers should discuss furloughing with staff and of course since furloughing imports changes to the employment contract it is crucial that the employer retains records evidencing the consent of the employee to the (temporary) change to his/her contract requiring him/her to stay at home and cease work, as well as consenting to a reduction in wages for the period of furlough (unless the employer decides to top up the 80% payment). 12
➢ It is important that employers do make clear that the placing of employees on furlough is not an indication that they will be selected for redundancy. ➢ In the event that redundancies do follow a period of furlough then it remains as important as ever to ensure that redundancy selection decisions are made on the basis of objective and fair criteria. 13
Can employees be rotated onto and off furlough? Yes - the guidance is quite clear that employees can be placed on and taken off furlough although a minimum 3 week period applies. This may be a way of dealing with complaints by some employees who wish to be placed on furlough because, e.g. the alternative is that they might be placed on short time working. 14
Can the employee request/demand to be furloughed? No - It is the employer who has the right to determine which employees are to be furloughed since it is the employer who makes the claim under the scheme. 15
Can the employee refuse to be placed on furlough? Yes - Unless the employee has agreed to the (furlough) variation clause s/he cannot be placed on furlough unwillingly and will be due contractual pay as normal 16
What is permissible for furloughed workers to do? ➢ Take part in training ➢ Take part in formal HR matters e.g. giving evidence in relation to disciplinary and grievance proceedings ➢ Be consulted about changes in the employer’s workplace ➢ Undertake duties and activities for the purpose of individual or collective representation of employees or other works 17
➢ A furloughed employee/worker can take holiday whilst on furlough ➢ Employees should be paid ‘their usual holiday pay’ for any annual leave taken during furlough, i.e. on the basis of their normal pay pre-furlough ➢ The grant under the scheme must therefore be topped up by the employer for any period of annual leave. Employees continue to accrue annual leave as per their employment contract during the period of furlough particularly those whose wages are reduced to 80% ➢ Note that if bank holidays are normally taken as holidays then these should be paid at normal rate, or the employee should get a day’s holiday in lieu. 18
➢ So far, the guidance has not specifically addressed the issue of employers requiring employees to take holidays during the period of furlough. ➢ Employers have an entitlement in accordance with Regulation 18 of the Working Time Regulations to require workers to take (or not to take) leave provided appropriate notice is given. ➢ The Regulations stipulate that notice must be twice as long as the period of leave required to be taken. So, if an employer required employees to take five days annual leave then ten days’ notice would be required. Employers may have additional entitlements under the terms of the Contract. 19
Also relevant in the discussion of annual leave are the recently introduced Working Time Regulations (NI) 2020 (Coronavirus amendment) which permit carry over of annual leave from the present year over a period of two years be recent that: It was not reasonably practicable for a worker to take some or all of the leave to which (s/he) was entitled as a result of the effects of Coronavirus (including on the worker the employer or the wider economy or society) 20
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