The coronavirus job retention scheme is a temporary scheme set in place starting from 1 March 2020 until October 2020. It can be used anytime during this period by employers.
This scheme is aimed at employers who cannot maintain their current workforce because their operations have been severely affected by Covid 19. As a result, you can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and pension contributions (up to the level of the minimum automatic enrolment employer pension contribution) on that subsidised furlough pay.
All employers are eligible to claim under the scheme, although it is primarily designed to help those whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy.
You may have some questions around this new scheme, so we have prepared a helpful Frequently Asked Questions (FAQ) guide below.
All UK employers that have created and started a PAYE scheme by 19 March 2020 are eligible. They must have a UK bank account and have enrolled for PAYE online.
This includes but is not limited to:
Both full-time and part-time employees can be included in the scheme, as long as they are paid via PAYE and were on the payroll prior to or on 19 March 2020. Additionally, employees on flexible, agency or zero-hour contracts are included.
Furloughing is a new term for many employers, which has previously not been defined in employment law. For an employee to be ‘furloughed’, this means that they must not undertake any duties of their employment or linked to their employer. Employers will need to issue written confirmation to employees who have been furloughed and keep a record of this for five years.
It is stated in legislation that an employee is furloughed if:
The government guidance does not offer any advice on selecting staff to be furloughed, however, it does recommend you begin by speaking to your staff about this scheme. You are required to receive the employee’s agreement, as this will minimise the risk of being subject to discrimination claims. Additionally, as employment law applies to this process, you will need to update the individual’s working contract once all parties have come to an agreement.
We recommend that you create an objective selection procedure to aid your decision-making. This will ensure that you are fair and consistent in choosing who to furlough, thus reducing the risk of breaching discrimination law.
Government guidelines state that employers can claim 80% of an employee’s ‘reference salary’ up to £2,500 a month. Additionally, employers can claim Employer National Insurance Contributions (NICs) and auto-enrolment pension contributions.
The Coronavirus Job Retention Scheme Portal opened on 20 April 2020. You can read more about this in our dedicated article here.
Once HMRC has checked the claim, if you are eligible, you will be paid the reclaimed funds by BACS to the UK bank account details provided in the claim. Funds must then be paid to employees in the form of money. No administration fee can be charged.
The government has set out in its guidelines that proof is not required. An employer can furlough workers due to reason of circumstances arising as a result of coronavirus.
Initially, the scheme was set to cover a four month period until 30 June 2020, although this has now been extended for another four months until October 2020. The government has confirmed that they will ask companies to “start sharing” the cost of the scheme in August.
It has also been confirmed that from August 2020, the scheme will continue for all sectors and regions of the country, but with greater flexibility to support a transition back to work.
Healys Solicitors specialist Employment Team can help you with all aspects of employment law. If you have any other questions which were not addressed in this page, do not hesitate to contact our team. Please contact Healys LLP on 0800 2800432 or email us at firstname.lastname@example.org.