Coronavirus: Furloughed Workers and the Job Retention Scheme PART TWO
Frequently Asked Questions No 2 Covid -19 CORRECT AS AT 27 MARCH 2020 PART TWO
Furloughed workers and the Job Retention Scheme
What can my company claim?
The portal can be used by employers to claim the lower of 80% of their regular wage or £2,500 per month. their Further guidance on how claims can be calculated will be provided before the scheme becomes live. It is clear that as well as normal “Wages” the Employer National Insurance contributions and minimum automatic enrolment employer pension contributions can also be taken into account in calculating wages. Fees, commission, bonuses and car allowance should not be included.
As the money being provided through the scheme is a grant, this will not have to be paid back.
An employer can choose to top up the employees’ salary in whole or in part but there is no obligation to do so and it will not be recoverable as part of this scheme. Our advice is to ensure that any top up is stated to be subject to regular review and overall affordability.
What happens if my employee’s pay varies month by month or even week by week ?
If an employee has been employed for a full twelve months prior to the claim then the employer can claim for the higher of either
* the same month’s earning from the previous year or
* average monthly earnings from 2019-2020 tax year
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. If the employee only started in February 202, use a pro rata for their earnings so far to claim. If in doubt take advise from your accountant or payroll provider
What if the reduced pay brings the employee below National Living Wage/National Minimum Wage?
Individuals are only entitled o receive these minimum wage rates for the hours they are working. Furloughed employees are not working therefore may receive less than the minimum wage rates whilst furloughed.
Can I operate a system for employees which is one week on and one week off furlough?
No, apart from the practical difficulties inherent in such an arrangement, you can only submit one claim at least every three weeks. Three weeks is the minimum length an employee can be furloughed for although claims can be back dated until 1 March if applicable .
How do I access the scheme?
The HMRC will provide an online portal for employers to input details of the affected furloughed employees.
An employer will need the following information to submit their claim to the 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 weeks)
- your bank account number and sort code
- your contact name
- your phone number
The amount being claimed will also need to be calculated by the employer. All claims may be retrospectively audited by HMRC so all paperwork should be retained securely and confidentially .
How will employers get paid?
Once HMRC have received your claim and you are eligible for the grant , they will pay it via BACS payment to a UK Bank account. Claims should normally be made in accordance with actual payroll amounts are the point at which you run payroll or in advance of an imminent payroll. Employees must receive in full all the grant received. Deductions for earlier over payments, outstanding debts or so called fees are prohibited.
What about staff who are already on another form of leave?
SSP – for those employees who are on currently on sick leave or self-isolating and being paid SSP, companies should continue to pay SSP. Once the sick leave or self-isolation period is over the employee can then be furloughed.
Maternity leave and family pay – the usual Statutory Maternity Pay or Maternity Allowance rules will apply meaning employees will be entitled to such pay for 39 weeks. For the first 6 weeks, employees are still entitled and should be paid 90% of their average weekly earnings or statutory flat rate (whichever is lower).
Enhanced (earnings related) contractual maternity, paternity, adoption or shared parental pay can be claimed through the scheme.
Any members of staff who have chosen to take paid annual leave may choose to remain on annual leave in order to receive 100% of their pay (in the event the employer is not paying furloughed employees the remaining 20%).
What if we are able to find work for our employees?
Aside from the minimum three week period referred to above there has been no guidance as to whether the period of time the employee is furloughed is required to be continuous. It is unlikely the Government would look negatively at employers who are able to find work for the employees, especially given this would be a reduction on the amount being paid out under the scheme. The scheme is being specifically designed to allow for furloughed staff can be brought back to work to replace those still working who later become sick. There is no guidance as to what notice should be given to employees as to their return to work. We advise that staff be pre warned that the request to return may be urgent or at comparatively short notice therefore they should keep themselves available as much as possible .
Should holiday still accrue for furloughed workers?
Subject to further guidance, our view is that employers should allow the continuation of holiday accrual whilst an employee is delegated as a furloughed worker.
What happens when the scheme closes?
Employers at this point will need to decide, whether employees can return to their duties. If not , it may be necessary to consider termination of employment due to redundancy or other r measures such as unpaid leave or short term working. HMRC will continue to process remaining claims before terminating the scheme.
If you have further questions on any matters raised in these FAQs, please do not hesitate to contact our employment team at email@example.com for any further advice. This general guidance is correct as at 27 March 2020 but may be subject to change. We strongly recommend that specific advice is sought as needed.