Update 17 April: The Government has now issued a guide that explains the information that employers need to provide to claim for their employees’ wages. This guide can be accessed here. The scheme will open on 20 April and you should receive payment six working days after making an application.
The Coronavirus Job Retention Scheme is offered by HMRC. The aim is to support business owners and enable them to pay for and keep their existing employees. This information has been updated as of the 7 April following further announcements from the Government
1. Furloughed members of staff must not work for the employer during the period of furlough.
2. Furlough period is from 1 March 2020, so is to be backdated. It will last for at least 3 months and will be extended if necessary. Note that while the scheme is backdated to the beginning of March as it is intended to support all those employed then, a firm will only be eligible to claim the grant once they have agreed the furlough with their staff and staff have stopped working for the employer. This will of course be subject to employment law in the usual way.
3. The scheme is available for employees on the payroll at 28 February 2020.
4. All UK businesses are eligible.
5. The scheme pays a grant (not a loan) to the employer.
6. The grant will be paid to the employer through a new online system which is being built for this purpose. There is no detail currently about how the application process will work.
7. The employer will pay the employee through payroll, and report payments to HMRC using the Real Time Information (RTI) system as usual, as required by the employment contract.
8. The scheme will be administered by HMRC:
• Relevant employees must be designated as furloughed employees.
• Employers will submit claims to HMRC through a new online portal.
• As the system will take time to build, businesses should look to the Coronavirus Business Interruption Loan Scheme to support cash flow in the meantime.
9. The maximum grant will be calculated per employee and is the lower of:
• 80% of ‘an employee’s regular wage’ and.
• £2,500 per month.
Plus the associated employers’ national insurance contributions (NIC) on this amount and the minimum automatic enrolment employer pension contributions on that wage.
Fees, commission and bonuses should not be included.
This gives a maximum cap of £2,500 +£245 (employers’ NIC) + £59 (auto- enrolled pension contribution) = £2,804 of total possible grant that can be applied for per employee per month.
10. Employees can start a new job when furlough.The guidance does state that it has to be allowed under the old employment contract, but this can be waived.
11. Employees can be furloughed multiple times, that is they can be furloughed, brought back to work, then re-furloughed
12.You must notify employees of their furlough status in writing and keep a record of that written notification for five years
13. Company directors can be furloughed but only perform statutory duties for the company, not normal day to day work.
For further guidance from HMRC:
• Guidance for employers on the Coronavirus Job Retention Scheme
• Support for employees on whether they are covered by the Coronavirus Job Retention Scheme