Furloughed…....or not….... workers

Hi,

We’ve been speaking to a lot of people who tell us that their employer has told them to go home, and that they will fall under the CV Job Retention Scheme. People have been told to wait until the end of April for their wages.

This is leaving people in a limbo state. They haven’t been furloughed, because they haven’t received a change, or even been consulted about, a change to their contract (if they have one) in writing.

It is my understanding that employers should continue to pay staff, and this payment may well reduce to 80% of their normal wage if this is included in the furlough agreement. At the end of April, once the employee has been formally furloughed for at least three weeks, the employer should be able to get a reimbursement of 80% of the employees salary.

It looks to me that, assuming the employee isn’t one of those that has been rehired following a redundancy and is eligible to be taken back on under the scheme by their former employer, the employee shouldn’t see a break in their payments (at worst, they will get 20% less than they normally would). If the employer has a cash flow problem, they can apply for the Business Interruption Loan.

A big concern at the moment is employers cutting employees adrift without pay, with a vague promise that it will all be sorted out at the end of April. If this is so, and the employer can’t pay the staff at the end of April, because the scheme is a reimbursement rather than a direct payment to employees, people are going to be destitute, and will miss out on benefit entitlement.

So, can anyone (#askrishi) tell me if there is any realistic prospect of an employee getting a payment at the end of April if they haven’t been furloughed for at least three weeks, and the employer hasn’t paid them (therefore has no ‘reimbursement’ to claim).

If i’m right, some employers will see the error of their ways and pay the staff themselves, but many, once they realise they won’t be getting a grant for people they haven’t paid, tell the employees, too late, that they have actually been dismissed without pay.

That sounds worrying - but I can’t see where it says it’s necessarily a reimbursement.

The only thing on the government site - https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme - that talks about when the claim can be made (beyond the 3 week minimum period) says:

“You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll”.

Which suggests that they can prepare payroll and then claim.

Is there anything other information that suggests it is reimbursement only ?

Employers may still mess this up hugely - and it does look like people have, incorrectly, taken this as a sign they don’t need to follow normal employment law, employment contracts or redundancy procedures…

Every close reading of it i’ve seen, talks about ‘reimbursement’. The FT ( “How UK companies can access state Covid-19 bailout funds | Free to read26/03/2020” )is even more specific on this:

Can the government help with wages?

For many businesses, this could be the government’s most meaningful intervention. HMRC has promised to reimburse 80 per cent of furloughed workers’ wage costs, up to £2,500 a month for each employee. 

The government will also cover furloughed workers’ National Insurance and pension contributions normally paid by employers. Those made redundant after 28 February can also be re-employed and placed on furlough.

Employers will still be required to make payroll payments. The money will be recovered through a grant from HMRC paid into the company’s bank account.

The scheme is one of the most ambitious, targeted at companies struggling to keep on hundreds of thousands of workers in restaurants, bars and shops that have been forced to close following the government’s lockdown last week.

Just about every legal/ employment advice blog i’ve seen talks about reimbursement, too. This is typical:

https://www.whitecase.com/publications/alert/covid-19-key-uk-employment-issues-guidance-note

One thing i have thought is that employers who have paid staff up to the end of March will be reimbursed the 80% from March 1st, and so could use this to pay employees for April. But they will never be reimbursed for what they haven’t paid (ie this won’t happen in the next month, if my reading of this is correct) . Again, i’m pretty keen for someone who knows to steam in and explain why this is wrong, but the general silence is pretty worrying.