I've heard the Government will cover 80% of some of my employees' salaries, how will that work?
What is meant by ‘furloughed’ workers?
An employee is ‘furloughed’ if they remain employed but are not undertaking work. This is new in the UK and is intended to prevent people being made redundant.
Who is eligible?
Any of your permanent PAYE employees who were on your payroll by the 28 February 2020 and would have been made redundant as a result of the Coronavirus. These can be those in full-time and part-time contracts qualify, as do employees on agency contracts or on flexible contracts, including those on zero-hour contracts.
What happens to employees who joined the company’s payroll after 28 February?
The job retention scheme is only eligible for employees with a PAYE reference number before February 28. If you do not have enough work to sustain the role you would need to consider other alternatives to redundancy.
What if an employee has already been made redundant after 28 February?
We are seeking clarification on this point. You should seek advice if this question arises.
Can furloughed employees take on new work?
While they are furloughed, they can NOT do any work for your company nor can they take on any other paid work in this time, however they can volunteer to help tackle the virus as long as it is in line with the Public Health Guidelines.
How much do furloughed employees get?
Firms can claim 80% of an employee’s wages up to a maximum of £2,500 per month plus the associated Employer NICS and minimum auto-enrolment employer pension contributions on that wage. That in effect raises the cap that the government has set to a maximum ceiling of £2,804 of total grant per employee
There are no exceptions to this (for example the National Living Wage).
If the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:
- the same month’s earning from the previous year
- average monthly earnings from the 2019 – 20 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 2020, use a pro-rata for their earnings so far to claim.
On the Job Retention scheme, does employee holiday accrue during the furlough?
Holiday will continue to be accrued while the individual is furloughed.
Who decides whether an individual is furloughed?
Whilst it is the decision of the employer on who will be furloughed based on which employees operate with reduced capacity, an employee can only be furloughed by agreement with them.
Can directors of limited companies furlough themselves?
Yes, as long as they are on the payroll as an employee. If they furlough themselves, they are not allowed to then work in the business whilst they are furloughed. However, they are allowed to undertake their statutory duties whilst furloughed, such as filing company accounts etc.
Does a furloughed employee retain their employment rights?
How do I furlough an employee?
Firstly you should have a conversation with each employee to explain why you wish to furlough them and ask for their agreement to do so. If the employee verbally agrees to be furloughed you must then write to each employee formally advising the details of this. A template is available from NFRC to assist with this.
Your employee must be furloughed for a minimum of three weeks at a time. You can place your employee on furlough in blocks of three weeks however they are not allowed to be on annual leave during furlough. You should agree with the employee when their furlough ends.
How long does the Coronavirus Job Retention scheme last for?
It will be in place for at least three months and backdated to start from the 1st March 2020.
How do I tell the government about a furloughed employee?
HMRC is building an online portal now for you to do this which they have said should be up and running by late April.
How do I get my hands on the cash from the Coronavirus Job Retention scheme?
Hopefully very shortly after the online portal is ready. We will give you updates when we know.
The key information companies will need is their PAYE reference number.