Today, HMRC have opened the portal for employers to log the details of those employees it has furloughed under the Job Retention Scheme.
Previously we wrote about the Government's launch of their Job Retention Scheme which had been broadly welcomed as a measure to try and support businesses and their employees during this time of economic uncertainty caused by the Coronavirus lockdown.
As a refresher, the scheme allows for employees to be furloughed in blocks of 3 weeks at any one time and employers can claim up to 80% of an employee's wages to be covered by the government grant, up to a maximum £2,500. Staff are then 'furloughed' - which means they are not allowed to work at all during this period.
However, when the scheme was introduced, and welcomed by many, it had very little detail and raised some practical problems and anomalies, which has now resulted in a further Government review and an announcement of a change.
Concerns raised with Government
Many new job starters had found themselves on the wrong side of the original cut-off date (28th February), resulting in their new employers unable to furlough them, and them being stuck in limbo between their old and new employment. Fosters highlighted their clients' concerns with local politicians and they raised the issues with Parliament, we are certain others also had the same concerns. We received notification from Mr Lewis MP, and subsequently by way of government update, that the Government, rightly, extended the scheme to include all those employees who had been registered for PAYE on HMRC's portal (Real Time Information (RTI)) on or before 19th March 2020. Whilst we do envisage there will still be some who fall outside of this extension, it has allowed thousands of employees who would have been left without protection now protected.
As before, employers will be able to re-employ those employees provided they completed the RTI on or before 19th March 2020.
Given the Government has always maintained throughout that normal employment laws apply, it has extended the scheme from its original three-month period until at least the end of June. Doubtless this was to allow companies with larger staff the ability to carry out extended consultation periods to furlough staff, and will come as a welcome relief to many organisations who are feeling the affects of the extended lockdown - and the anxiety felt about the recovery period afterwards.
How it works
Below we have included a summary of some of the key points regarding the way in which the Scheme will work.
- Employers will be entitled to a grant from HMRC equal to 80% of monthly wage costs up to £2,500, plus National Insurance Contributions and minimum pension contributions on that wage.
- You will need to apply for any grant through the HMRC online portal system.
- As a reminder, claims can be backdated to 1st March 2020 but only employees who were on the PAYE payroll on 19th March 2020 shall be eligible.
- Employers have the option to top up an employee's salary beyond the 80% grant, but is not an obligation under the scheme.
- To be eligible to make a claim under the scheme, you must have sent written confirmation to your affected employees, confirming that they have been furloughed and you should keep a copy of this.
- Employees must be furloughed for a minimum of three weeks and the scheme is to be open for up to three months, but this may be extended.
- You can only submit a claim once every three weeks.
- Any UK organisation shall be eligible provided they had a payroll in place on 19th March 2020 and a UK bank account.
- Administrators working through administrations can also apply.
- Employees on any type of contract shall be eligible, whether that is full-time; part-time; agency or flexible/zero hours.
- Any staff made redundant after 19th March 2020 will also be eligible provided they are rehired.
- During the furlough period, employees must not undertake any work for, or on behalf of, the organisation.
- Wages received during the furlough period shall continue to be subject to the usual income tax and other applicable deductions.
- The employment contract must be varied by agreement, confirmation must be made in writing to the employee and a record kept of this communication.
- Equality and discrimination laws will continue to apply to those being furloughed and during the furlough period.
- Those employees on sick leave or self-isolating should receive SSP but may be furloughed after this. Those shielding in line with public health guidance can be placed on furlough.
- A furloughed employee is able to take part in volunteer work or training, provided they do not provide services to, or generate income, for or on behalf of the organisation.
The above is a summary of some of the key aspects of the latest guidance. The full government guidance is also available here.
If you have any questions about furlough or need assistance implementing it with your staff, please contact our employment team on 01603 620508.