|HMRC have released further details about how the Coronavirus Job Retention Scheme will work: |
· The scheme is to avoid employees being made redundant.
· It only applies to employees that are furloughed (employees on leave of absence). This means the employee must do no work, or generate any income, for the employer.
· Employers do not have to operate this scheme. Employers can choose to carry on paying their furloughed employees or can choose to make them redundant. If an employee is made redundant the employer may have to pay redundancy and pay-in-lieu of notice. There is no government funding for either of these. In these circumstances it is generally more economical to operate the scheme.
· It only applies to employers that operated a Pay As You Earn (PAYE) scheme that was registered with HMRC at 28 February 2020.
· All UK employers can claim including charities and those under administration.
· Employers can only claim for employees who were on the payroll on 28 February 2020.
· Employers cannot claim for self-employed workers.
· Employers cannot claim for employees who were not on the PAYE scheme (eg because they didn’t earn enough).
· The employer pays the furloughed employee wages. The employer must pay a minimum of 80% of the wages but can pay more if the employer chooses.
· The employer receives a rebate of 80% of the employee wage costs for February 2020 (excluding bonuses) including the cost of employer national insurance and employer pension contributions subject to a maximum of £2500 per employee per month. There are special rules for employees whose pay varies. There are also special rules for an employee who only started working during February 2020.
· Employees laid off after 28 February 2020 then taken back on can be furloughed.
· Employees laid off before 28 February 2020 cannot be furloughed even if they were taken back on after 28 February 2020.
· Employees can be on any type of contract including part time, agency workers and zero-hours.
· Employees on unpaid leave at 28 February 2020 cannot be furloughed.
· When furloughed, the employee’s wage is subject to tax and national insurance as normal.
· Employees on sick pay or self-isolating can be furloughed when their sick/self-isolating period has finished.
· Employees who are shielding in line with public health guidance can be furloughed.
· Employees with more than one job can be furloughed. Each job is treated separately and each is subject to its own £2500 monthly cap.
· Furloughed employees are not working so the National Minimum Wage/National Living Wage does not apply.
· Employees can carry out voluntary work or training when furloughed.
· Furloughed must last for a minimum of 3 weeks.
· Employers must discuss furloughing with employees and confirm decisions it in writing.
· Claims are made every 3 weeks on an online portal which should be operational by the end of April.
· Claims are paid by HMRC direct to the employer.
· It is not clear whether accountants can operate the system on behalf of employers.
· Claims can be backdated to 01/03/20 if necessary.
· Furloughed employees continue to have employment rights (eg unfair dismissal and redundancy) and are entitled to SSP, SMP, SAP etc.
· There is no mention of directors but https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#other-help-you-can-get says they can be furloughed.
· Initially HMRC has said that employees must remain furloughed until they resume employment or are made redundant. However the scheme permits employees to be paid for training. Clarification is being sought as to whether employees can return for other reasons (eg to undertake limited work) then be re-furloughed.
Further details at https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
Please remember that the information on GOV.UK is being revised daily and that applies just as much to HMRC pages. The content of the links will definitely change over coming days as HMRC clarifies the rules (especially the last two points), so please check the pages regularly.