Blog: Seafarers and the Coronavirus Job Retention Scheme

Coronavirus

The latest blog from Ince looks at the government's Coronavirus Job Retention Scheme (CJRS) and how it applies to the shipping industry and seafarers. 

What is the CJRS?

The CJRS is a UK government scheme used to support employers whose operations have been severely affected by coronavirus (COVID-19). The CJRS is currently running from 1 March 2020 to October. It is not limited to those employees who would otherwise be made redundant.  All employers need to show is that the employee is being furloughed “by reason of circumstances arising as a result of coronavirus”. 

What does it mean to be ‘furloughed’?

Being furloughed means employees remain employed by the company, meaning they are still bound by their terms and conditions of employment. Importantly, once furloughed, employees cannot carry out any work which generates revenue for the employer. Training is permitted to be carried out, provided employees receive the National Minimum Wage for any hours spent in training.

Can the CJRS be used by shipping companies for seafarers? 

To make use of the scheme, companies must have:

·       created and started a PAYE payroll scheme on or before 19 March 2020;

·       enrolled for PAYE online; and

·       a UK bank account.

Although seafarers have not been specifically confirmed as being able to be furloughed, the government guidance has confirmed that employees on “any type of contract” can be claimed for.

Therefore, provided companies meet the eligibility criteria bulleted above, there is no reason why shipping companies cannot furlough seafarers under the CJRS.

Can all seafarers be furloughed?

Furloughed seafarers must be employees and must have been notified to HMRC on a real time information (RTI) submission on or before 19 March 2020. This could cause issues for seafarers who were not put on the payroll until late February as there may have been no RTI submission for them by 19 March 2020. 

The seafarers can be on any type of contract and seafarers on all categories of visa can be furloughed. This means that overseas nationals are also eligible for the scheme.

Seafarers that provide services in a self-employed capacity are not covered by the CJRS.

My company is non-UK. Are my seafarers covered?

The CJRS is not just limited to UK companies.

If you are an organisation or entity that has a created and started a PAYE payroll scheme on or before 19 March, enrolled for PAYE online and has a UK or Channel Island bank account, you can make use of the CJRS.

What does the CJRS cover?

The scheme will provide a grant of the lower of either:

·       80% of an employee’s ‘regular wage’; or

·       £2,500 per month.

Plus, the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that reduced wage.

Claiming for an employee’s ‘regular wage’ means disregarding items such as performance related bonus, any discretionary payments such as tips, any conditional payments and any non-financial benefits. It remains unclear whether overtime which is worked with regularity is intended to be covered by the scheme.

An employer can reclaim 80% of compulsory commission subject to the cap (i.e. commission that arises from a contractual scheme). Employers cannot claim for discretionary commission.

Non-monetary benefits, such as the value of health insurance, cannot be claimed for. 

How do I furlough seafarers?

Shipowners should consult with their seafarers and make any changes to their Seafarers’ Employment Agreements by written agreement, taking into account provisions of any Collective Bargaining Arrangements if necessary.

The government has confirmed that employers must obtain written agreement (which may be in electronic form) from employees of their furlough status and their agreement to cease all work in relation to their employment, and any other changes to their terms and conditions of employment.


My shipping company does not qualify. What else can my seafarers claim?

The UK Chamber of Shipping is actively seeking clarification that the UK government scheme for self-employed workers and freelancers will assist those members without an employer who operates PAYE.

Furthermore, the Department for Transport is making representations to HM Treasury on behalf of the maritime industry in an attempt to bring more seafarers under the scope of the CJRS.

In the meantime, provided seafarers have maintained National Insurance contributions, they should be able claim benefits if they are on a reduced income or become unemployed.

To claim benefits, seafarers need to be a UK citizen or have an immigration status which allows them access to public funds. Financial and social support is also available from various maritime charities and unions.

The above does not constitute legal advice. Should you have any queries, please do not hesitate to contact the authors of this article, Martin Pratt (martinpratt@incegd.com) and/or Holly Freuchen (hollyfreuchen@incegd.com).


Click here to find out more about the employment team at Ince.

Following recent developments in relation to COVID-19, the Ince global offices have been advising clients on a wide range of issues arising and stand ready to assist you and your business with any concerns that you might have. Click here to read more.