Introduction
Contained within this document you will find FAQ’s in relation to the Coronavirus Job
Retention Scheme.
This is a temporary scheme to help businesses in distress as a result of the Coronavirus pandemic. It is available in respect of those employees that would otherwise have been unemployed during the outbreak, who for the purposes of the scheme are described as furloughed employees, in order to try and protect their jobs.
In order to access the scheme, employers need to decide which of their employees are furloughed employees, notify and agree with those employees that they are furloughed employees and submit information to HMRC about the employees which have been furloughed and their earnings through a new online portal.
The furloughed employee remains employed by the employer during the furlough period and cannot carry out work for the employer during this period.
1. What does furlough mean?
· Placing an employee on Furlough means they can stay on a payroll even though their place of work is unable to operate or has no work for them due to Coronavirus.
2. Who can claim?
· You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.
· This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020.
3. Which employees can I claim for?
· full-time and part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts.
· Foreign nationals are also eligible.
4. How do I make a claim?
· The portal to make claims become operational on Monday 20th April 2020
· Full guidance on how to cacluate your claim can be found at https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme .
· Employers will need to calculate the amount they are claiming. HMRC will retain the right to audit every claims
5. I made a number of people redundant prior to the scheme being introduced, can I rehire them?
· Yes, if they were made redundant after 28th February 2020. You can then furlough them after rehiring them.
6. If I furlough my employees, can they undertake a small amount of work?
· No, however they can undertake “training or volunteer” as long as they are not making money or providing services for the employer.
· If time spent training attracts a NMW entitlement in excess of the furlough payment, the employer must pay the additional wage for this time.
7. I am a director of the business, can I furlough myself and carry on working?
· You cannot continue working once you are a furloughed worker except to carry out your statutury duties as a director.
8. I am proposing to furlough some employees and not others, am I able to do this?
· Yes, but please remember that during your selection process, equality and discrimination laws will apply in the usual way.
9. I have an employee who is on maternity leave how should I treat their payments?
· If the employee is eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply.
· If the employer offers enhanced (earnings related) contractual pay to women on Maternity Leave then this is included as wage costs that you can still claim through the scheme.
10. Can my employees continue to complete their apprenticeship programme whilst furloughed?
· Yes, employees can continue their apprentiship programmes whilst furloughed
· Employers must pay apprentices AMW,NLW or NMW for all the time they spend training so must cover any shortfall from the scheme.
11. Minimum wage / living wage increased on 1st April, do I have to implement this if my team are furloughed?
· The government have still implemented these rate changes from 1st April 2020 so employers will need to implement this change.
· For furloughed workers, what employers can claim is based on earnings from before 1st April 2020 so these new rates will not be reflected in these payments.
12. Can a furloughed employee continue to carry out work for an alternative employer and still receive payment through this scheme?
· If an employee was already on another employer PAYE payroll scheme before 28th February 2020 then they can continue working for that employer.
13. Can an employee carry out alternative work whilst furloughed?
· Yes, employees can obtain alternative work whilst furloughed
· However, if the employee’s contract of employment prevents them carrying out work for an alternative employer, then the employee may be in breach of contract.
· Employers can allow a temporary variation of contract if they are willing to allow employees to work elsewhere whilst on furlough.
14. Do employees continue to accrue annual leave whilst furloughed?
· Yes, employees are still entitled to accrue holiday whilst furloughed. Employees on variable or zero hours contracts will continue to accrue holiday in the usual way.
15. How do I furlough my employees (No Lay off / Short Term Working Clause)
·Employers should discuss with their staff and make any changes to the employment contract by agreement.
· When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
·To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS.
· There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years.
16. We have a layoff / short term (LOST) working clause in our contract how should we go about furloughing our employees
·As you have a LOST clause in your contract it is not necessary to seek agreement to this change. However,
·It is best practice to following the process above to ensure you have the relevant records should you need them.
17. Is the 80% or £2,500 gross or net?
· The 80% or £2500 is gross pay and deductions will still need to be made from this pay for National Insurance, Income Tax and any pension contributions.
18. How long should an employee be furloughed for?
· An employee must be furloughed for a minimum of 3 consecutive weeks
19. I have employees who are currently self isolating as per the instructions from the government, can I furlough these employees?
· Employees self isolating should continue to receive company or statutory sick pay but can be furloughed after this period.
20. What information will I need to enable me to make a claim via the HMRC portal?
· your ePAYE reference number
· the number of employees being furloughed
· the claim period (start and end date)
· amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
· your bank account number and sort code
· employer’s contact name
· employer’s phone number
21. Do I have to continue supplying a company car/car allowance whilst an employee is furloughed?
· This will depend on what their employment contract states about cars and personal use given the furloughed employee will be on temporary leave and not required to work. If cars are provided for business use only then an employer could ask for them to be returned, but if cars are provided for business and personal use then the furloughed employee would be entitled to keep the car.
· The position with car allowances will depend on whether it is paid as a separate benefit or part of normal basic pay.
22. What if my employee’s averge monthly earnings include commission and bonus?
· Employers can claim for any regular payments they are obliged to pay their employees.
· This includes past overtime and compulsory commission.
· They should not include discretionary payments such as tips or bonus.
23. Are we required to still pay the Apprenticeship Levy
· Yes, this should still be paid as usual. The JRS does not cover this and it cannot be claimed for.
24. A member of my team is working their notice and have asked if they can be furloughed rather than to leave employment.
· Nothing in the scheme prohits you from extending an employee’s notice period and furloughing them.
· However, if your business remains operational and employees continue to have meaningful work to carry out, then it may be against the spirit of the scheme.
25. Can an employee who is shielding be furloughed?
· Yes, you can claim for furloughed employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant.
26. If an employee is unable to work due to caring responsibilities can they be furloughed?
· Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed.
· For example, employees that need to look after children can be furloughed.
27. Due to a downturn in business I may need to make redundancies can I use the grant money to support any financial payments?
· Whilst the grant cannot be used to subsidise redundancy payments, it can be used to account for some of the notice period.
· The consideration here is that if you will need to pay notice at 100% which is not 20% greater than what is being claimed on furlough but their normal wage or average earnings over a 13 weeks period.
· Where employers have removed some benefits such as commission, car allowances this would need to be included in any notice payment and new NMW / NLW would also need to be applied to average hours.
· However, the amount that you can claim through the scheme would remain based on the current calculation
28.Can I require employees to take holiday whilst furloughed?
· Employers may request employees to take leave as long as they provide double the amount of notice to the period of leave which is being requested.
· Employees will need to be paid 100% of their salary / wages for any period classified as annual leave, this does not affect the furlough status
· Employers can continue to claim 80% of wages based on the scheme rules.
A note on Contracual Variations
In these unpresidented times organisationas may be seeking to vary employees terms and conditions of employment to enable them to reduce costs. Employment law on contractual variations has not changed as a result of Covid-19 however, you may seek agreement from your employees in writing to vary terms. Employees must confirm acceptance to any variation in writing.
Whilst you may seek to vary terms that are above the statatory minimum for example Holiday, Company Sick Pay, Pension contributions you must ensure that you maintain the statatory minimum levels as per current employment legislation.
Useful Links:
Rules on carrying over annual leave to be relaxed to support key industries during COVID-19
Full Guidance on Coronavirus Job Retention Scheme (updated 20th April 2020)
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
