Update 17 April 2020
The Government has now announced the Furlough Scheme has been extended by one month until the end of June, more details in the link below.
Update 15 April 2020
The Government has now published more guidance for employers on how the Coronavirus Job Retention Scheme will operate.
The announcement on 15 April 2020 moves the eligibility date from 28 February to the 19 March, which was the day BEFORE the scheme was announced so that should mean those who genuinely started new jobs in March can still be furloughed, whilst reducing the opportunity for fraud. So as long as the employee was enrolled on the payroll before 19 March.
Further details on the scheme are here:
We expect that, while answering a number of issues raised since the scheme was announced, this will raise still further questions from businesses as to how the scheme might apply to their specific circumstances.
We recognise that not all businesses are the same and so have put together a list of our client’s most commonly asked questions which we hope you will find useful.
Please do read the guidance at the above link and then our FAQs below.
As ever, please call or email your usual contact at Rayner Essex to discuss any specific issues you have with this or any of the Coronavirus business support measures that have been announced.
Do we have to contact HMRC to register and instigate this scheme?
The scheme is open to all UK employers that had created and started a PAYE scheme on 19 March 2020. Claims will be made via a portal which is currently being created.
When will the portal be open?
This is planned for 20 April 2020.
How often can I claim?
You can only submit a claim once every three weeks, which is the minimum length an employee can be furloughed for.
Claims can be backdated until 1 March if applicable as the scheme also covers employees who were made redundant since 28 February 2020 and prior to 19 March, if they are rehired by their employer.
How is the scheme going to work – do we pay the staff and then reclaim the amount back from HMRC or are they going to pay employees direct?
You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll. You must pay the employee all the grant you receive for their gross pay.
Do I have to top up my staff’s salaries?
An employer can choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
Is the figure of £2,500 a gross figure and will tax and Employers/Employees NIC contributions still be deducted?
The £2,500 is the gross figure payable to the employee, and this is taxable in the normal way.
The employer’s claim will be the gross payable plus the associated Employer National Insurance contributions and minimum automatic enrolment pension contributions on that subsidised wage based on qualifying earnings. Fees, commission and bonuses should not be included.
How do we go about putting staff on the scheme?
Employers must discuss this with their staff and make any changes to the employment contract by agreement.
To be eligible for the subsidy, employers should write to their employee confirming they have been furloughed and when they have been furloughed from and keep a record of this communication.
Can Company Directors be included in the scheme?
Company directors, as office holders, are eligible to be furloughed though the scheme, provided that the director is able to meet his or her duties owed to the company as set out in the Companies Act 2006 and does not carry out any work of a kind that they would carry out in normal circumstances to generate commercial revenue.
Where directors are to be furloughed we recommend that a board minute to formally adopt the decision is prepared for the company records stating the reasoning behind the decision and the period for which it runs.
Can Members of a Limited Liability Partnership (LLP) be included in the scheme?
Salaried members of an LLP are eligible to be furloughed and receive support through the scheme, provided that they are designated as employees for tax purposes. In order to furlough a member, the terms of the LLP agreement may need to be varied by a formal decision of the LLP. This variation would reflect the fact that a member will perform no work in the LLP and the effect of this on their remuneration.
Who else does the scheme cover?
The scheme will also cover:
- Employees with more than one job (the cap will apply to each employment individually)
- Employees on fixed term contracts
- Agency workers (including those employed by umbrella companies)
- Limb (b) workers (“dependent contractors”) – although such workers may be eligible for the Self-Employed Income Support Scheme instead.
- Nannies (or other such employees) employed by individuals
A new member of staff joined my organisation and I am now struggling to keep them busy. Can I furlough them?
Under the rules of the scheme employees hired after 19 March cannot be furloughed.
Can furloughed employees still carry out small basic tasks?
Quite simply – No.
To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation. This includes providing services or generating revenue.
However, a furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.
If workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
Do we now stop making auto-enrolment pension contributions if our employees go on the Coronavirus Job Retention Scheme?
No. The grant will cover the minimum automatic enrolment pension contributions on the subsidised wage. If you top up an employees salary then normal auto enrolment should still be applied.
When will I get the money for my first claim?
Not straight away. The portal for making claims is expected to up and running by 20 April.
Can Rayner Essex assist claim this on my behalf?
This is a separate process to the payroll. Rayner Essex can assist you with considering eligibility and calculating the amounts to claim. We also hope to be able to assist with making the claim on your behalf, but this may depend on how the portal will operate.
Can employees make a request to be furloughed?
Guidance on this is not provided. However, we are aware that if staff are not busy then they may raise the issue of furloughing. Ultimately any decision must be the employers and must be based on the needs of the business and whether there is sufficient work or alternative work for that person.
Can furloughing be backdated in relation to employees who have already been made redundant?
The scheme also covers employees who were made redundant since 28 February 2020 and prior to 19 March 2020, if they are rehired by their employer.
Will they retain their continuous employment?
Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.
Will holiday pay continue to accrue?
Employees that have been furloughed have the same rights as they did previously.
If we decide to keep staff of say 5 people in the office is there any further aid available to us?
Additional support is available through VAT payment deferral, Small Business Grant Funding (if you already receive small business rate relief or rural rate relief) and the Coronavirus Business Interruption Loan Scheme.
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