Coronavirus Job Retention Scheme – How to access it?
Updated: Apr 15, 2020
UPDATED on 31 and 27 March 2020 to reflect further information from the Government
The fast-moving feast moved again on Friday 20 March 2020 when it was announced the government was forcing many businesses to close. At the same time, it announced a scheme designed to prevent job losses by funding 80% of employees salary up to a maximum of £2,500 per month per person. This has been backdated to 01 March 2020.
So let's look at some of the details surrounding this:
In order to access this support, employees must be furloughed for a minimum of 3 weeks and enrolled in the pay-as-you-earn (PAYE) system at 19 March 2020.
To be classed as on furlough, employees must be sent home and must not carry out any work for you although they can be involved volunteer work or training so long as this activity doesn't generate revenue for your business.
Employees will continue to accrue holiday in line with the Working Time Regulations (5.6 weeks per year). The government has introduced a temporary new law so that employees and workers can carry over up to 4 weeks’ paid holiday over a 2-year period, if they cannot take holiday due to Coronavirus.
Technically, unless you have a clause in your contract allowing you to introduce lay off or short time working, you will need consent to furlough employees but, in reality, if an employee refuses, they risk redundancy which is what this scheme is trying to avoid.
It is advisable to gain consent from your employees, particularly if you are unable to top up the 80% to minimise the very small risk of claims for deduction of earnings. In most cases, the employee will understand that furlough is the only option available to protect their future employment.
It has now been confirmed that the National Living Wage and National Minimum Wage will not apply as no work is being carried out. However, if you require people to carry out training during furlough, you must pay the NLW/NMW even if this is more than the 80% you are able to reclaim.
As I've mentioned in my previous blogs, how you handle the communications surrounding this is key to keeping your people engaged. Ideally, this would be explained in person or in a telephone call but this may not be practicable for all businesses.
In terms of issuing formal letters to confirm furlough and to obtain consent, it would be advisable to do this via e-mail if possible. This will reduce the need for contact and allow your employees to remain at home.
HMRC are aiming to have the portal live by the end of April 2020 and have provided details of the information you will need to provide for each claim in this update.
If you do furlough your people, remember to stay in regular contact with them via telephone calls and e-mail updates. This will be an anxious time for everyone and your people may need support from you while not at work.
The most recent guidance has confirmed that the scheme will cover zero hour workers who fit all the other criteria. A scheme has been launched for self-employed people but nothing has been put in place specifically for business owners to replace their loss of income during this time.
In terms of people who have already been laid off but were on the payroll on 28 February 2020, it has been confirmed that you can backdate the furlough and reinstate their employment. If a redundancy payment has already been made, you can consult with the individual to see if they would prefer to be furloughed and pay back the payment.
HMRC has confirmed that the pay on which the 80% will be calculated will be based on the same month's earnings from the previous year or an average from tax year 2019/2020 whichever is higher.
I've updated this blog to reflect the new information and will continue to update it as more information becomes available.
If you have any specific questions about furlough or need help in producing employee letters and communications, please get in touch. I am still offering a free 30 minute telephone consultation to any small businesses who need some support.