The Coronavirus Job Retention Scheme aims to help businesses severely impacted by COVID-19 maintain their workforce by temporarily furloughing their employees.
Businesses furloughing their employees can claim a Government grant that covers up to 80% of each employee’s usual monthly wage cost up to £2,500 (plus the associated Employer National Insurance contributions and pension contributions at automatic enrolment employer contribution levels).
It is a temporary scheme, which the Government are currently advising will run until the 31st October 2020. It will be available in full for the period 1st March to the 31st July.
The Chancellor has announced modifications that will be made to the scheme from July.
These include the modification that, from July, employers will be able to return their staff to work for part of the week and place them on furlough for the remainder. From August, businesses with furloughed employees will be asked to make a mandatory contribution to the 80% salary costs paid by the government.
This will start with employers being required to pay National Insurance and pension contributions in August, followed by 10 per cent salary contributions from September and 20 per cent from October. However, firms will not be able to furlough additional staff from 10th June.
Businesses can submit their claims through an HMRC Portal (click here). Employers are able to backdate their claims to the 1st March.
Businesses will be required to submit key information including:
Any employees that were on your organisation’s PAYE payroll before 19th March 2020, regardless of their contract type, nationality or visa type.
If you made an employee redundant or they stopped working for you after the 19th March 2020 your organisation can reemploy them, put them on furlough and claim 80% or their wages under this scheme.
You cannot furlough employees that started working for your organisation after the 19th March 2020.
You will also not be able to furlough additional employees from 10th June, though those already furloughed can remain as such.
While furloughed, employees are not able to undertake any work for your organisation or any associated organisations. Employers may reallocate their work to employees who are not furloughed.
From July, employers will be able to return their staff to work for part of the week and place them on furlough for the remainder. These employees will only be able to undertake work for your or associated organisations during the part of the week that they are not furloughed.
While on furlough, the employee’s wage will be subject to income tax and other usual deductions.
Employees must be furloughed for a minimum of 3 weeks.
Employers should request their employee’s agreement to be furloughed in writing. A template letter is available from Acas (see below)
When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
To be eligible for the grant employers must confirm in writing to their employee that they have been furloughed. A record of this communication must be kept for five years.Note: if you wish to furlough additional employees, you must do so by 10th June. Employers will not be able to furlough additional employees from 10th June (though those already furloughed can remain as such).
Claims are calculated from the date that the employee finished working and started furlough leave (not the date of the decision or the date that they were written to confirming their status).
How furlough pay is calculated varies depending on the individual in question’s contract and status.
No, provided you have your employee’s written consent to be furloughed at 80% of salary, topping up pay to 100% is a voluntary contribution.
However, from August, your organisation will need to contribute to the 80% salary costs being paid by the government, by paying National Insurance and pension contributions in August, in addition to 10 per cent salary contributions from September and 20 per cent from October.
Note: With regard to apprentices, if the furlough payment is less than the appropriate minimum wage entitlement for the training hours, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for 100% of the training time.
From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim the Coronavirus Job Retention Scheme grant for their normal hours not worked. When claiming the grant for furloughed hours employers will need to report and claim for a minimum period of a week.
To furlough employees on a part-time basis, an employer will need to have reached a written agreement with their employees (or reached a collective agreement with a trade union) that confirms the furlough arrangement.
Further guidance on flexible furloughing and how employers should calculate claims has been published and can be below:
Busting Myths about Furlough & planning for future with HR Dept. and Wildings Solicitors
McDonald's franchisee and Chamber patron Doug Wright answers questions on furloughing staff. Mr Wright was furloughed around 2,000 staff at his 20 McDonald's restaurants under the Government's Job Retention Scheme.
This video explores the latest advice on furloughing employees, insight into more Government support and other critical employment law considerations. It is led by Charlie Frost, Partner, Squire Patton Boggs and hosted by the Greater Birmingham Chambers of Commerce.Please note: this video was recorded on the 8th March and pre-dates the Government extending the duration of the scheme to the end of June and the cut off point for having employees on payroll to the 19th March.
Has your business been impacted by Coronavirus? Contact your relationship manager or submit a message below: