COVID-19: Job Retention Scheme - Furloughed Workers

Under the Job Retention Scheme, announced by the Government on 20 March 2020, all UK employers will be able to access support to allow them to continue paying part of their employees’ salary for those employees’ that would have otherwise been laid off during the crisis.

WHEN WILL THE SCHEME BE OPEN
As previously advised, the Government expects the scheme to be up and running by the end of April.

WHICH EMPLOYEES CAN YOU CLAIM FOR
Furloughed employees must have been on your PAYE payroll on 28 February 2020 and can be on any type of contract including:
  • Full time employees
  • Part time employees
  • Employees on agency contracts
  • Employees on flexible or zero-hour contracts
Other employees based on specific circumstances also qualify. 
FIND OUT MORE

WHICH EMPLOYEES CAN YOU NOT CLAIM FOR
  • Employees working on reduced hours or for reduced pay.  These will need to be paid as normal to the terms of the employment contract you agreed.
  • Employees hired after 28 February 2020
  • Employees on unpaid leave, unless they were placed on unpaid leave after 28 February.
WHAT YOU NEED TO DO TO BE ELIGIBLE
You should write to your employees confirming that they have been furloughed and keep a record of this communication.  When deciding who to offer furlough to, equality and discrimination laws apply in the usual way.  You do not need to place all your employees on furlough.

WHEN CAN YOU CLAIM AND HOW OFTEN
Employers can use this scheme anytime in the three month period from 1 March 2020.

You can only submit one claim at least every three weeks, which is the minimum length that an employee can be furloughed for. Claims can be backdated to 1 March 2020.

WHAT YOU NEED TO CLAIM
•    your ePAYE reference number
•    the number of employees being furloughed
•    the claim period (start and end date)
•    amount claimed (per the minimum length of furloughing of 3 weeks)
•    your bank account and sort code
•    your contact name
•    your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

WHAT CAN YOU CLAIM AND HOW DOES THE SCHEME WORK
Employers can use a portal to claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

Employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. You can choose to top up the employees’ salary beyond this point but is not obliged.

More guidance will be issued on how to make claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live

Details on what to base your claims on can be found here 

WHAT HAPPENS AFTER A CLAIM HAS BEEN MADE
Once HMRC have received your claim and you are eligible, they will pay it via BACS to a UK bank account. You must pay the employee all of the grant you receive, no fees can be charged.

When the scheme ends you must make a decision, depending on your circumstances as to whether employees can return to their duties. If not it may be necessary to consider redundancy.

Employees that have been furloughed have the same rights as they did previously. That included SSP entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.

Once the scheme has been closed by the government, HMRC will continue to process remaining claims before termination the scheme.

INCOME TAX AND EMPLOYEE NATIONAL INSURANCE
The employees’ wage will be subject to usual income tax and other deductions. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt out.

Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.

DOWNLOAD FACTSHEET: FURLOUGHED WORKERS - EMPLOYER FAQS

If you need further advice or guidance, please contact your usual Moore adviser.
 
 
 

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