The Coronavirus Job Retention Scheme: Q&As for employers

Under the Coronavirus Job Retention Scheme (CJRS), the government will make a grant to UK employers to cover up to 80 per cent of the wages of employees whom they continue to pay but who would otherwise have been laid off as a result of the coronavirus (COVID-19) crisis.

The original version of the scheme ran from 1 March 2020 to 30 June 2020 and has now been replaced by phase two of the scheme which runs from 1 July 2020 to 31 October 2020. This new phase is known as "flexible furlough", the principal difference being that, in phase two, furloughed staff are allowed to work on a part-time basis with employers claiming a grant under the scheme for their non-working hours. Employers are also required to bear an increasing proportion of furlough costs from 1 August 2020.

We set out below a series of Q&As to help you navigate the CJRS. These are based on:

• a number of guidance notes from HRMC about the scheme, collected together here, as updated to 17 July 2020; and
  
• a Treasury Direction made on 15 April 2020 and modified by two further Treasury Directions, one made on 20 May 2020 and one made on 26 June 2020.

Q1 Which employers can seek support under the CJRS?

All organisations which have a PAYE payroll scheme registered on HMRC's real time information (RTI) system on or before 19 March 2020 are eligible for support under the CJRS. The employer will also need to have a UK bank account for the grant to be paid into.

The scheme applies to any such organisation, including companies, partnerships, not-for-profit organisations, recruitment agencies (where agency workers are paid through PAYE) and public authorities. There are no restrictions on size or sector. However, organisations which are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff. Additionally, the government expects employers – whether in the public sector or not – who receive continuing public funding for staff costs to use that money to pay staff as normal and not to furlough them. In a small number of cases, such as where organisations are not primarily funded by the government and staff cannot be redeployed to assist with the coronavirus response, it may be appropriate to furlough some staff.

Where a company is in administration, the administrator will be able to access the CJRS. However, the government expects an administrator only to access the scheme if there is a reasonable likelihood of re-hiring the workers, for example if the business is sold.

Q2 Which types of workers are covered by the scheme?

The scheme applies to "furloughed employees". This is not a legal term. It has been used to refer to staff whose employment is not terminated but who are on unpaid leave of absence from work.

Furloughed employees can be either UK or foreign nationals, including those on all categories of visa.

Furloughed employees can be on any type of employment contract. This includes:

• full-time employees;
• part-time employees;
• employees on agency contracts ; and
• employees on flexible or zero-hour contracts.

Members of staff may be furloughed even if they are not strictly employees as a matter of law, provided they are paid through PAYE. This includes the following:

• office holders (including salaried company directors);
• salaried members of limited liability partnerships (LLPs);
• agency workers (including those employed by umbrella companies); and
• "limb (b) workers" i.e. individuals who do not have a contract of employment but are treated by law as workers with certain employment rights.

We refer to "employees" in this set of Q&As for convenience. 

See also Q3.

Q3 Which employees are eligible under the scheme?

To be eligible, a furloughed employee must have been employed on 19 March 2020 and on their employer's PAYE payroll on or before 19 March 2020. This means that an RTI submission notifying HMRC of payment in respect of that employee must have been made on or before that date.

Employees on fixed-term contracts can be furloughed provided an RTI submission for them was notified to HMRC on or before 19 March 2020. If the contract has not already expired, it can be extended or renewed. Employees that started and ended the same contract between 28 February 2020 and 19 March 2020 do not qualify for the CJRS. See also Q15.

The original version of the scheme closed to new entrants on 30 June 2020 and we have now moved into flexible furlough (see Q13). From 1 July 2020 onwards, only employees for whom the employer has successfully claimed a previous grant under the scheme are eligible. This means that they must previously have been furloughed under the scheme for at least three consecutive weeks between 1 March 2020 and 30 June 2020. As a result, the final date on which an employee could have been furloughed for the first time is 10 June 2020, in order to allow for the minimum three-week furlough period then applicable (see Q6) to be completed by 30 June. There are exceptions for employees who return from statutory parental leave (i.e. maternity leave, paternity leave, adoption leave, shared parental leave or parental bereavement leave) after 10 June or who are military reservists returning from a period of mobilisation after 10 June. Those employees can still be put on furlough under the scheme after 10 June even though they themselves have not previously been furloughed, provided that they were on their employer’s PAYE payroll on or before 19 March 2020 and the employer has made a previous claim under the scheme prior to 30 June for at least one other employee.

The maximum number of employees that can be claimed for in a claim period starting from 1 July 2020 onwards may not exceed the maximum number of employees claimed for in any single claim up to 30 June 2020. However, employers may add on to this figure any employees who are furloughed on return from statutory parental leave or from a period of mobilisation. This restriction may be important for employers that have rotated staff between work and furlough. Suppose, for example, an employer has 100 staff of whom 50 are on furlough and 50 are at work for a three-week period. The two groups then swap over. This continues until 1 July 2020 when part-time working is permitted (see Qs 13 and 14). Any single claim under the scheme in respect of the period up until 30 June 2020 will only ever have been made in respect of a maximum of 50 employees. Therefore, if on 1 July 2020 the employer brings all 100 staff back to work part-time, only 50 can be claimed for in a future claim (plus any staff returning from statutory parental leave or mobilisation).

Q4 How do employees become furloughed?

Employers need to designate employees as furloughed employees and notify them of this change. The guidance provides that, to be eligible for the grant, the employer must write to the employee confirming that they have been furloughed. The original Treasury Direction made on 15 April 2020 referred to the need for an agreement in writing between the employer and employee, implying that a unilateral confirmation would not be sufficient. This was inconsistent with the guidance and caused much concern among employers who had relied on the guidance prior to the publication of the Treasury Direction. The position was clarified by the two subsequent Treasury Directions. These provide that, for an employee to be validly furloughed:

• the employer and employee must have agreed prior to the start of the claim period that the employee will cease work or, under flexible furlough, not work their full hours – this may be by way of a collective agreement between the employer and a trade union;
• the agreement must specify the main terms and conditions of the furlough, be incorporated into the employee's contract (either expressly or impliedly) and be made in writing or confirmed in writing by the employer (email is sufficient); and
• the agreement must be retained by the employer until at least 30 June 2025.

This approach is now consistent with the guidance in that it is sufficient for the agreement to be "confirmed in writing". Note, however, that it is still necessary for a form of valid agreement to be reached with employees.

Making a change to an employee's status by furloughing them remains subject to existing employment law and may need to be negotiated, depending on the employment contract.

A simple designation by the employer, without agreement from the employee, is unlikely to be sufficient. This will only be possible if the employment contract gives the employer a unilateral right to withdraw work and this is unlikely. Some employment contracts or negotiated agreements provide specifically for lay-offs in which case those provisions could be invoked to designate the employees as furloughed employees. However, in most cases, it will be necessary to agree with employees that they will be furloughed. If the alternatives are redundancy or unpaid leave of absence, it is very likely that employees will agree to being furloughed in order to receive the financial protection on offer. A consultation exercise may, however, need to be carried out – see Q5.

Where a salaried company director or a salaried member of an LLP is furloughed, the furlough arrangements should be adopted formally as a decision of the company or LLP, a record kept and the individual notified. In the case of an LLP, the terms of the LLP agreement may need to be varied to reflect the fact that the member will be furloughed and the impact on their remuneration.

Q5 Do employers need to consult with staff before designating them as furloughed employees?

It is unlikely that the contract of employment will contain a clear right to furlough employees. In the absence of such a right, the furlough would either be a change to the employee's terms and conditions or, more likely, an alternative proposal to redundancy. Implementing furlough arrangements may trigger collective consultation obligations depending on the organisation of the workforce and the number of employees affected. We would be happy to guide you through this if you would like to get in touch. If collective consultation obligations are triggered, the usual time frame for the consultation to take place is unlikely to be viable in the current situation. There is a "special circumstances" defence which would allow the process to be condensed and again we can talk you through this.

In addition to collective consultation, it is likely that individual consultation will also be required given that a change is being proposed to an employee's current working arrangements (and potentially to their wages). The level of discussion required will vary depending on the number of employees the business has to talk to and how quickly changes need to be made.

Q6 For how long can employers furlough employees?

Until 30 June 2020, the minimum length of time that an employee could be furloughed was three consecutive weeks. Employees could be furloughed multiple times but each period of furlough had to be at least three consecutive weeks.

From 1 July 2020, there is no minimum period for which an employee may be furloughed (although a claim under the scheme must still cover a period of at least a week). Where an employee who had previously been furloughed started a new period of furlough before 1 July 2020, that period must still run for at least three weeks. It is only where the furlough period begins from 1 July 2020 onwards that there are no restrictions on length.

A period of furlough can be extended while the employee is on furlough.

Q7 Do employers have to prove that employees are being furloughed as a result of the coronavirus crisis?

To be eligible for furlough, an employee must have been instructed to cease working "by reason of circumstances arising as a result of coronavirus or coronavirus disease". The Treasury Directions go on to warn that no CJRS claim may be made in respect of an employee if it is abusive or is otherwise contrary to the exceptional purpose of CJRS.

No information has been given as to how the government will check that employees are being furloughed as a result of the coronavirus crisis rather than for other reasons. However, it seems sensible to document this as fully as possible.

Q8 How much of employees' wages will the government pay?

Until the end of July 2020, the government will pay employers a grant to cover 80 per cent of a furloughed employee's wage costs, up to a cap of £2,500 per month. Employers can also claim for the associated employer's national insurance contributions (NICs) and minimum mandatory auto-enrolment employer pension contributions on the furlough pay (but not additional pension contributions above the mandatory employer contribution). When calculating the amount of employer's NICs to claim for under the scheme, any Employment Allowance used in the relevant pay period must be subtracted.

From the start of August 2020, employers will have to start bearing part of the wage costs of furloughed employees as follows:

• August: the government will continue to pay 80 per cent of wages up to the cap of £2,500 per month. Employers must bear the cost of the associated employer's NICs and pension contributions;
• September: the government will pay 70 per cent of wages up to a cap of £2,187.50 per month. Employers must bear the cost of the associated employer's NICs and pension contributions as well as 10% of wages to make up the 80 per cent total (subject to the £2,500 monthly cap);
• October: the government will pay 60 per cent of wages up to a cap of £1,875 per month. Employers must bear the cost of the associated employer's NICs and pension contributions as well as 20 per cent of wages to make up the 80 per cent total (subject to the £2,500 monthly cap).

Furloughed employees may return to work part-time from 1 July 2020 (see Qs 13 and 14) under flexible furlough. Employers can still make a claim under the scheme in respect of an employee's non-working hours. In that case, the £2,500 per month cap applies on a pro-rated basis.

A claim may be made for any regular payments which employers are obliged to pay their employees. As well as wages, this could include past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments are not covered.

Where an employer provides benefits through a salary sacrifice scheme that reduce an employee's taxable pay, those benefits should not be included in the pay for which a claim is made. Where employees are allowed to switch out of salary sacrifice arrangements on the occurrence of a life event, HMRC agrees that COVID-19 counts as a life event.

While on furlough, the employee's wage will be subject to their usual income tax and other deductions.

Employers may choose to pay the wages of furloughed employees in full while only reclaiming up to 80 per cent of the cost (or less if the cap bites) but there is no obligation to do so. No claim can be made for additional employer's NICs or pension contributions made because of topping-up.

Q9 What pay will be used to calculate the reimbursement?

For full-time and part-time salaried employees, the employee's actual salary, before tax, as at 19 March 2020 will be used to calculate the 80 per cent figure.

For employees with variable pay who have been employed (or engaged by an employment business) for at least twelve months before the claim, the employer can claim for up to 80 per cent of the higher of either:

• the wages earned in the corresponding calendar period in the 2019-20 tax year; or
• the average wages payable in the 2019-20 tax year.

For employees with variable pay who have been employed for less than a year, the employer can claim for up to 80 per cent of an average of their monthly earnings since they started work until the date they are furloughed.

For employees who have been employed for less than a month, employers should pro-rate their earnings so far in order to claim.

Where employees on fixed pay have returned to work following a period of statutory leave (such as maternity leave, sick leave etc.) and are then furloughed, the claim should be made on the basis of what they would have received while on leave if it had been a period of paid annual leave, not the pay they actually received whilst on statutory leave. Where an employee returning from statutory leave is on variable pay, the calculation should be based on the highest of either the same month's wages from the previous year or average monthly wages for the 2019-20 tax year.

Q10 How do employers claim their reimbursement?

An online portal has been set up by HMRC to deal with the CJRS. To use the portal, employers will need:

• their employer PAYE scheme reference number;
• the number of employees being furloughed;
• the names, NI numbers and (optionally) the payroll/employee numbers for the furloughed employees;
• their Self-Assessment Unique Taxpayer Reference, Corporation Tax Unique Taxpayer Reference, Company Registration Number or Employer Name (as appropriate);
• the start and end date of the claim period and the amount claimed;
• their bank account number and sort code; and
• their contact name and telephone number.

Furloughed employees must be paid no less than 80 per cent of their pay (subject to the cap) and the employer may not reduce wages below this amount by imposing any administration charge, fees or other costs. Pension contributions claimed (see Q8) must be paid into a pension scheme for the employee as an employer contribution.

Employers will need to calculate the amount that they are claiming and retain all records and calculations for at least six years, including the amount claimed for each furloughed employee and the period for which each employee is furloughed.

HMRC will retain the right retrospectively to audit all aspects of the claim. HMRC may withhold, or seek to recover, grants in full if the claim is based on dishonest or inaccurate information or found to be fraudulent. Under new legislation, HMRC will have extensive enforcement powers, including the ability to recover inappropriate payments by retrospectively taxing them as income tax or corporation tax at the rate of 100 per cent. Penalties may be levied for deliberate breaches. However, there will be a 90-day grace period during which employers may notify HMRC of errors and escape further sanction beyond repayment of the wrongly claimed amount. It is important for employers to keep good records, particularly where non-standard pay arrangements operate, such as where employees are on sick leave or some other form of statutory leave.

HMRC will pay the grant via BACS payment into an eligible employer's UK bank account. 

Q11 For how long will the scheme last?

The scheme will last until 31 October 2020. The first phase of the scheme ended on 30 June 2020.  From 1 July 2020, flexible furlough applies, meaning that furloughed employees may return to work part-time (see Qs 13 and 14). From the start of August, employers will be asked to pay part of the wage costs of furloughed employees (see Q8). The final date on which an employee could have been furloughed for the first time was 10 June 2020 - see Q3.

Q12 What is the tax treatment of the CJRS grant?

Payments received under the scheme by a business must be included as income when calculating its taxable profits for income tax and corporation tax purposes. However, employment costs may be deducted as normal.

Q13 Can employers ask furloughed employees to carry out any work for them?

Furloughed employees remain in employment but, until the end of June 2020, could not be asked to carry out any work for or on behalf of their employer, or any linked or associated organisation. This includes providing services or generating revenue.

However, furloughed workers may return to work part-time from 1 July 2020. This is referred to as flexible furlough. It is optional; employers can continue to keep employees fully furloughed if they prefer. Employers may choose the hours and work patterns that their employees will work on their return and are responsible for paying their wages while in work together with the tax and NICs due. For the hours that employees do not work, a claim can be made under the scheme, provided a claim was previously made for the employee in relation to a furlough period of at least three consecutive weeks between 1 March 2020 and 30 June 2020. The hours not worked must be calculated by reference to the usual hours worked by the employee in a claim period. Records must be kept of usual hours, hours worked and hours not worked. The cap on the amount of wages that can be claimed of £2,500 per month applies on a pro rata basis where an employee is on flexible furlough. More information, together with worked examples, are contained in this HMRC guidance note.

Where an employee who had previously been furloughed began a new period of furlough less than three weeks before 1 July 2020, they must complete those three weeks – even though that takes them past 1 July - before they can then move on to flexible furlough.

The part-time working arrangements should be agreed with the relevant employees or there may be a collective agreement with a trade union. There needs to be a written record of what was agreed and this should be kept for at least five years.

For any period during which an employee is on furlough,whether on a full-time or part-time basis, the restrictions on working for their employer still apply. However, provided the rules on providing services or generating revenue are not breached, furloughed employees may carry out certain activities as follows.

Union and non-union employee representatives may continue to carry out their role for the purpose of individual or collective representation of employees or other workers. A furloughed employee who is a pension scheme trustee or manager may carry out the duties associated with that role.

A furloughed employee may participate in volunteer work or study or training, such as online training courses. Where an employee is requested to complete training whilst they are furloughed, they must be paid the national minimum wage appropriate to them for the time spent on the training even if this is more than the 80 per cent of their wage that will be subsidised.

Furloughed directors may carry out duties necessary to fulfil the statutory obligations that they owe to their company, provided they do no more than would reasonably be judged necessary for that purpose. Directors may also make CJRS claims in respect of the company's employees and pay them their salary or wages. This applies equally to salaried directors of personal service companies.

Furloughed employees are allowed to work for another employer. However, this may be prohibited under the employment contract, either completely or during their contracted hours. If so, furloughed employees will only be able to work for another employer if these contractual restrictions are waived.

See also Q14.

Q14 Can employees be furloughed on a part-time basis?

Not prior to the end of June 2020. Up until then, where an employee was working reduced hours or for reduced pay, they were not covered by the CJRS and employers had to continue paying them through payroll in accordance with their employment contract. 

However, from 1 July 2020, furloughed workers may return to work part-time as discussed in Q13.

Q15 Can an employer reinstate employees who have recently left and make them furloughed employees instead?

Yes. Employees who stopped working for an employer on or after 28 February 2020, whether through redundancy or otherwise, are covered by the CJRS if they are re-hired by their employer, even if they are not re-employed until after 19 March 2020. Any such employee must have been on the PAYE payroll as at 28 February 2020 and been notified to HMRC on an RTI submission on or before that date. A claim may be made for their wages from the date on which they were furloughed under the scheme. However, they must have been put on furlough by 10 June 2020.

Similarly, employees who stopped working for an employer on or after 19 March 2020, whether through redundancy or otherwise, are also covered by the CJRS if they are re-hired by their employer. Any such employee must have been employed on 19 March 2020 and on the PAYE payroll as at 19 March 2020 i.e. had been notified to HMRC on an RTI submission on or before that date. A claim may be made for their wages from the date on which they were furloughed under the scheme. However, they must have been put on furlough by 10 June 2020.

An employee on a fixed-term contract could have been re-employed and furloughed up to 10 June 2020 if either:

• their contract expired after 28 February 2020 and an RTI payment submission for the employee was notified to HMRC on or before 28 February 2020; or
• their contract expired after 19 March 2020 and an RTI payment submission for the employee was notified to HMRC on or before 19 March 2020.

Q16 Can a redundancy exercise take place while employees are furloughed?

Employers may already have had a redundancy exercise in place before the CJRS was announced or may be contemplating redundancies as the effects of the virus escalate. The purpose of the CJRS is to enable employees to return to their jobs once the crisis is over. Employers may, therefore, consider it inappropriate to conduct a redundancy process affecting furloughed employees during their period of furlough, although the CJRS does not impose any such condition. New wording introduced into the Treasury Direction of 26 June 2020 says that integral to the purpose of the CJRS is that amounts claimed are used by the employer "to continue the employment of employees". This raised concerns that grants under the CJRS could not be used to meet wage payments during a redundancy exercise or subsequent notice period, since redundancy would be incompatible with continued employment. However, the government guidance has been updated to confirm that employers may continue to claim under the CJRS for a furloughed employee who is serving a statutory or contractual notice period (and presumably, therefore, during the preceding redundancy consultation exercise). The grant cannot be used to substitute redundancy payments. Payments in lieu of notice are unlikely to be recoverable under the CJRS.

See also Q25.

Q17 How do you treat employees on unpaid leave?

No claim can be made in respect of an employee on unpaid leave for obvious reasons. Employees who started unpaid leave after 28 February 2020 can end their unpaid leave and be furloughed instead. Employees who went on unpaid leave on or before 28 February 2020 cannot be furloughed until the date it was originally agreed or contemplated they would return from unpaid leave. However, where agreement was reached during a period of unpaid leave - and before 20 March 2020 - to end it earlier than originally planned, the employee may be furloughed from the revised finishing date. Any such employee could only have been furloughed for the first time up until 10 June 2020.

Q18 Can annual leave be taken during furlough?

Yes, employees can take annual leave during furlough. If an employee is on flexible furlough, any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours. 

Employees are entitled to a minimum of 5.6 weeks of statutory paid annual leave each year. Any variation to holiday entitlement as part of the furlough agreement cannot go below this figure.

Under the Working Time Regulations, holiday pay must be paid at the employee's normal rate of pay (with averaging rules applying for those on variable pay). The HMRC guidance provides that, if a furloughed employee takes holiday, the employer must pay them their usual holiday pay i.e. based on their full non furlough pay. Employers not already paying full wages to furloughed employees would therefore have to make a top-up payment during annual leave over and above the amount recoverable under the CJRS.

Employers may wish to require furloughed employees to take holiday during the furloughed period to avoid them having large amounts of accumulated leave once they are back at work. There is nothing in the HMRC guidance to suggest that employers cannot do this, although they would need to balance against this the need to pay full pre-furlough pay during a period of leave. Employers would also need to comply with the very specific notice provisions which apply when requiring employees to take leave at particular times.

Conversely, on the basis that they will then be entitled to full pre-furlough pay, furloughed employees may request holiday during the furlough period. Employers have the right to restrict when leave can be taken and may wish to exercise this power if they lack the funds to meet the holiday pay entitlement. Again, specific notice provisions apply.

It appears that an employee can be both on furlough and on leave at the same time so that a period of annual leave would not break the minimum three-week period of furlough applicable until 30 June 2020. On 13 May 2020 the government published a guide to holiday entitlement and pay during coronavirus, available here. This sets out the position for both furloughed and non-furloughed staff. The guide reiterates the CJRS guidance on holiday pay for furloughed employees, as set out above.

Nevertheless, HMRC has specifically said that it is keeping the policy on holiday pay during furlough under review so a change to the position cannot be ruled out.

Q19 How do you treat employees on sick leave?

Employees who are on sick leave or who are self-isolating as a result of coronavirus should receive statutory sick pay (SSP). The guidance points out that the CJRS is not intended to cover short-term sickness absences and that a period of furlough must be at least three weeks long (until 30 June 2020). Nevertheless, employers may furlough employees on short-term sick leave as well as those on long-term sick leave or shielding (i.e. employees in the very vulnerable category who have been told to stay at home for 12 weeks - or who need to stay home with such a person). It is possible for the employer and employee to agree the date on which the period of sick leave ends so that SSP stops and a period of furlough can then begin. Employers may make claims for the same employee both through the CJRS or the SSP rebate scheme but not for the same period of time.

Where employees become sick while on furlough, the guidance provides that employers must decide whether to keep them on furlough or move them on to SSP. In cases where furloughed wages are lower than SSP, there is still some uncertainty as to whether an employee must be paid an amount equal to SSP while sick but retained on furlough and, if so, whether the excess is recoverable under the scheme.

Employers should also consider the impact on furloughed employees of any contractual or discretionary sick pay policies which they operate.

Q20 How do you treat employees with caring responsibilities?

Employees who are unable to work because of caring responsibilities resulting from COVID-19, such as those looking after children, can be furloughed.

Q21 How do you treat employees who have more than one job?

Each job is separate. Where employees are in this situation, they can be furloughed for each job and the £2,500 cap will apply to each employer individually (other than where the separate jobs are actually within a common employer group, when a cap does apply).

Q22 How do you treat employees on maternity leave, paternity leave, adoption leave, shared parental leave or parental bereavement leave?

The normal rules for the various forms of parental leave and pay will continue. Where an employer offers enhanced earnings-related contractual pay for the various types of parental leave, this is a wage cost that can be claimed through the CJRS (less any statutory maternity pay etc., whether or not actually claimed).

Q23 Can you pay furloughed employees less than the national minimum wage?

Individuals are only entitled to the National Living Wage (NLW), National Minimum Wage (NMW) or the Apprentices Minimum Wage (AMW) for the hours they are working or treated as working under the minimum wage rules. Therefore, furloughed workers may be paid the lower of 80 per cent of their salary or £2,500 per month even if, based on their usual working hours, this would be below their appropriate minimum wage.

See also Q13 on payment for training.

Q24 How do you treat apprentices?

Apprentices can be furloughed and at the same time continue their training. However, they must be paid at least the AMW, the NLW or the NMW as appropriate for the time they spend training. 

Employers must, therefore meet the difference between the amount claimed for their wages through the CJRS and the minimum wage which applies to them.

Q25 What happens when the CJRS ends?

The government guidance says that it is for employers to decide whether employees can return to their duties once the scheme ends on 31 October 2020 and that it may be necessary to consider redundancies. There is no obligation to retain the services of furloughed employees for a period. Nevertheless, to encourage the retention of staff, employers will receive a bonus of £1,000 for each furloughed employee who remains continuously employed until the end of January 2021. For an employer to be eligible for the bonus, the employee must earn above the lower earnings limit (£520 per month) on average between the end of the scheme and 31 January 2021. Payments will be made from February 2021. All employers who have furloughed staff are eligible, regardless of whether or not they were planning redundancies, although some have already announced that they will not be claiming the bonus. For those employers who are contemplating redundancies, it remains to be seen whether the availability of the bonus is a sufficient incentive to impact on that decision.

Q26 What are the consequences for non-furloughed employees?

It is possible that employees remaining in work may feel resentment towards furloughed colleagues who are receiving up to 80 per cent of their pay (or possibly all of it) while not working, particularly if those at work are also having to accept a greater risk of being infected by the virus through remaining in the workplace. This is something which will need to be managed by employers.

Further information

For more information on the CJRS or if you have any other questions, please speak to your usual Ashurst contact or either of the partners named below.