The last few weeks has
seen so many changes to businesses due to the Lock down. If your business has not
been able to work remotely and has had to close, no doubt, you will have taken
advantage of the Furlough Job Retention Scheme.
Since the Furlough
Scheme was announced the Government have published further details and we have set
them out below.
These are the key points, some of
which had not previously been announced:
- 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. With agency employees, the scheme is only available for agency employees who are not working;
- employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer NICs and minimum auto-enrolment pension contributions on that wage. Fees, commissions and bonuses are not included;
- an employer can choose to top up to 100%, but does not have to (any changes are subject to employment law and renegotiating any contractual entitlements);
- 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;
- individuals are only entitled to the minimum wage for the hours they work. So, if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However, they are entitled to be paid National Minimum Wage for any time spent training;
- to be eligible, 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 February 2020 and has since been made redundant can be rehired and put on the scheme;
- furlough leave must be taken in minimum blocks of three weeks to be eligible for funding, there is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks;
- the employee must not be working at all. If they work for even an hour, they are not eligible to be furloughed. However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
- when agreeing changes in hours (and acceptance of 80% pay), if the contract does not already allow for that, normal employment law applies. The employer must be careful not to discriminate in deciding who to offer furlough too;
- employees on sick pay or self-isolating cannot be furloughed, but can be furloughed once they are no longer on sick leave. Employees who are shielding (isolating) in line with Public Health Guidance, can be placed on furlough;
- employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed.
- employers can only claim once every three weeks, i.e. they cannot get weekly reimbursement. Claims can be backdated to 1 March 2020;
- HMRC hope to have the portal available by the end of April 2020.
If you would like to discuss Furlough or check if your employment
contracts require changes to protect your business once you are able to return
to work, please contact us on 01245 261883