Further to our previous article, Lockdown – what do employers do now?, we have now received further guidance from the government in respect of its Coronavirus Job Retention Scheme.
You can review the complete guidance here
- The scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020.
- Any organisation with employees can apply, including charities, recruitment agencies and public authorities.
- Employers can receive a grant to cover the lower of 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 subsidised wage.
- For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.
- An employer can choose to top up to 100%, but does not have to (subject to employment law obligations).
- To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation.
- For employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (e.g. earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year.
- To be eligible for the Scheme, the employee must have been on the payroll on 28 February 2020. If they were hired later, they are not eligible. Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put on the scheme.
- The employee’s wages will be subject to usual income tax and other deductions.
- Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working. Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW. However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
- Furlough leave must be taken in minimum blocks of three weeks.
- Employees on sick pay or self-isolating should get Sick pay, but can be furloughed afterwards. Employees who are shielding can be placed on furlough.
- Furlough leave does not protect employees from redundancy and it appears they can still be made redundant either during or after furlough leave. The usual redundancy process should be followed.
What information are we still waiting for?
The government will issue further guidance on the mechanics of claiming the payment in due course. It says it expects the scheme will be up and running by the end of April.
We are keeping our fingers on the pulse with any developments in this area so do watch this space. For any help and support please contact us on please contact our employment team on 0345 20 73 728 or at firstname.lastname@example.org