3 weeks ago
Coronavirus Job Retention Scheme 27th March 2020
GOVERNMENT GUIDANCE ISSUED
The Government has issued some much needed guidance on how the Furlough Scheme will work. We are grateful to Daniel Barnett for drawing our attention to it and summarise it below. A link to the guidance is at the end of this article.
This remains “Guidance” but should be taken to supersede all previous guesses at the contents of this scheme. The actual legislation remains unpublished but the full scheme is expected to be up, running and known, by the end of April.
The employer must have had a PAYE scheme in place on 28th February 2020, and the employee must have been employed on that same date.
Anyone made redundant after that date can be rehired and Furloughed. Anyone laid off after that date can be retrospectively placed on Furlough.
What can be claimed?
The employer can reclaim 80% of the wage cost of that employee, but not bonus or commission.
However, IN ADDITION the employer can claim back employer NIC’s and the minimum auto enrolment contributions.
There is NO OBLIGATION to top up to 100% on the part of the employer. However, you must remember that you need either a lay off clause in your contract, OR the consent of the employee because you are paying less than the contract stipulates. Make sure you get consent.
Where pay varies every month the employer can claim back THE HIGHER OF:
- The employee’s wage in the same month last year, OR
- The employee’s average monthly earning over the 19/20 tax year.
The National Minimum Wage will not apply to the 80% because to qualify the employee must be working, not sat at home.
How will it work?
The employer notifies the employee, either because there is a lay off clause in the contract, or because the employee wants to agree to it. The alternative may be redundancy.
Agreement should be obtained in writing.
Send the employee home. ABSOLUTELY NO WORK IS PERMITTED TO BE DONE FOR THE EMPLOYER. The exception to this is volunteering or training.
Employees must take Furlough in minimum blocks of 3 weeks. No less. However, there is nothing in the guidance that says you cannot rotate employees, 3 weeks at a time, or a month at a time.
Sick and self isolating employees cannot claim Furlough. However once they are due to return, they can be Furloughed. Maternity leave continues as normal unless the employee gives notice to end their maternity leave early and can then be placed on Furlough. At the end of Furlough, they would then return to work.
Payments from the government through the online portal will be at maximum frequency of 3 weeks, YOU CANNOT CLAIM WEEKLY.
The actual guidance can be, and should be read at the following link. https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Please email any questions and we will publish Q and A’s as often as we can.