Covid-19 Job Retention Scheme - our furlough update
Following the governments updated guidance on Wednesday 15th April 2020, we have put together our updated guidance on the Job Retention Scheme and the changes that have been announced. This is in addition to our earlier blog.
About the Scheme
The government has announced a furlough scheme to avoid job losses and/or redundancies. They will fund 80% of staff salaries who would otherwise have lost their employment had they not been furloughed.
What about National Living Wage/National Minimum Wage increases?
It is our understanding that any employee who is on furlough at the time of the NLW/NMW increase in April will not benefit from these increases.
The amount of funding should be calculated on the salary as at 19th March 2020. If the employer has already made their calculations based on previous guidelines of 28th February 2020, they can still use this date.
The salary will only be increased once the employee returns to work or if employees undertake any training while on furlough.
When will the HMRC portal open?
The government have suggested that the portal will be open from 20th April 2020 and there will be a 4 to 6 day processing period while background checks are being carried out. This is to prevent any fraudulent claims.
Payment will be made by BACS transfer to a UK bank once eligibility has been confirmed.
Who is eligible?
Any employee who has been employed on or before 19th March 2020, who were notified to HMRC on an RTI submission on or before 19 March 2020 and has been placed on furlough leave. All businesses in the UK irrespective or size or sector will have access to the scheme. The employees must have been registered on the company’s PAYE system on or before this date.
Employees who are on unpaid leave cannot be furloughed, unless the leave was taken after 28th February 2020.
Furlough leave is for a minimum of 3 weeks so employers will not be able to claim any funding for a shorter period.
How will I prove that I have furloughed employees?
All employees who have been furloughed should have signed a furlough agreement which the company must keep on record for 5 years.
HMRC reserve the right to audit businesses who have claimed for the funding.
How does the Scheme work?
Once furlough status has been agreed, it will remain the responsibility of the employer to pay their staffs wages at a rate of at least 80% of their normal earnings and claim this back from HMRC. Employers will be able to submit their claim through a new HMRC portal. To claim the funding, the employer must be registered for online PAYE, this can take up to 10 days. Employers should look at a Coronavirus Business Interruption Loan if appropriate to cover salaries in the meantime.
To claim, employers will need:
- To claim, you will need:
- your employer PAYE reference number
- the number of employees being furloughed
- National Insurance Numbers for the furloughed employees
- Names of the furloughed employees
- Payroll/employee number for the furloughed employees (optional)
- Company Registration Number
- 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
- your contact name
- your phone number
If you have under 100 employees, you will be asked to enter the details of each individual employee onto the system. This will include their name, national insurance number, claim period, claim amount and payroll/employee number (optional).
If you have more than 100 employees, you will be asked to upload a file containing all of the above information. The file formats that will be accepted are: xls, xlsx, csv and ods.
Please be aware that should employers chose not to pay salaries, this is a breach of the employment contract and an unlawful deduction of earnings, which could result in a tribunal claim.
Employers are able to pay the additional 20% of salary if they so wish but are under no obligation by the government to do so and this cannot be claimed back.
It is important to remember that while an employee is on furlough leave they must not undertake ANY work for the business. This means any activity that provides a service or generates revenue.
If your question isn’t included in this blog, check out our earlier post as it may be included there.