25 Mar The Coronavirus Job Retention Scheme: furlough guidance – 25/03/2020
The aim is to keep people at home while enabling employers to keep staff who will need it. When they begin to rebuild their businesses in the future. This will enable work to begin again with a critical core that has the necessary knowledge.
Rules as outlined in official statements released on 23 March 2020
- Furloughed members of staff must not work for the employer during the period of furlough.
- Furlough is from 1 March 2020, so is to be backdated. It will last for at least 3 months and will be extended if necessary. Note that while the scheme is backdating to the beginning of March. As it is intended to support all those employed then. A firm will only be eligible to claim the grant once they have agreed on the furlough with their staff. The staff has stopped working for the employer. This will of course be subject to employment law in the usual way.
- It is available to employees on the payroll on 29 February 2020.
- All UK businesses are eligible, ‘any employer on the country, small or large, charitable or non-profit’ to use the Chancellor’s words.
- The scheme pays a grant (not a loan) to the employer.
- The grant will be paid to the employer through a new online system that is being built for this purpose.
- The employer will pay the employee through payroll, using the Real-Time Information (RTI) system as usual. As required by the employment contract. This contract may be renegotiated but that is a matter for employment law. So RTI system reporting of payroll will continue as normal.
- The scheme will be administered by HMRC: Relevant employees must be designated as furloughed employees. • Employers will submit information to HMRC through a new online portal. • As this will take time to build, businesses should look to the Coronavirus Business Interruption Loan Scheme to support cash flow in the meantime. The narrative used in the information released so far. He says ‘if your employer cannot cover staff costs due to COVID-19 they may be able to access support…’. This is a conditional phrase that may relate to existing funds available to the employer. We do not yet know how these might be determined, nor whether there is a bar of some description.
- the largest grant will be calculated per employee and is the lower of • 80% of ‘wages’. The notes published so far, use the phrase ‘wage for all employment costs up to a cap of £2,500 per month’. It is our understanding that this includes employers’ NIC and pension contributions. Wages will be determined by reference to a defined period (yet to announced). • £2,500 per month.
- If Mr. A had not opted out of auto-enrolment, X Ltd would also be making pension contributions on his behalf. If so, the available grant is base on 80% of (gross salary + Employers’ NIC + employers pension contributions paid). Subject to the monthly cap of £2,500
- We understand that the rules for the scheme are being designed with an underlying reference to employment law. If the individual is still under contract, Mr. A can expect to receive his salary in full. The £1,739 grant paid to X Ltd should not take as the new most cost of employment to the employer unless the contract has been redraft.
- Subject to the employment contract and any amendment. the salary which the employer actually pays. The employee during the furlough period may be different from the pay paid used as the reference period and upon which the grant figure is based.
Pubco – a scenario
Which businesses are eligible?
How is payment going to work in practice?
What is the £2,500 largest grant based on?
Employees with more than one employment