Job Retention Scheme: Advice to Employers – Part Two

Following our recent article on the Job Retention Scheme (27th March), the Government has now provided more information on the furlough process for employers, including who can be claimed for and how to claim.

This article should be read in conjunction with our previous article on the Job Retention Scheme which can be found here.

The main updating points are:

The online claim service is expected to be up and running by the end of April 2020

Who can claim?

To claim you must have:

  • Created a PAYE payroll scheme on or before 28 February 2020
  • Enrolled for PAYE online
  • A UK bank account

Apprentices

There is confirmation that apprentices can be furloughed but you must pay the apprentice at least the Apprentice Minimum Wage, National Living Wage or National Minimum Wage for the time that they spend training. So, if there is any shortfall between the 80% wage and this amount, you will have to make up the difference.

Public sector organisations

Where a business continues to receive public funding for staff costs, employers are expected to continue to use that money to pay staff and not to furlough them.

Employees you can claim for:

  • Staff who were on the payroll as of 28th February 2020
  • Staff made redundant after 28th February 2020 can be re-employed and furloughed
  • Employees who are shielding in line with public health advice (or need to stay at home with someone who is shielding) can be furloughed if they cannot work from home and would otherwise be made redundant
  • Employees who have caring responsibilities resulting from coronavirus can be furloughed e.g. employees who have to look after children
  • If an employee has more than one job they can be furloughed for either or both jobs and the cap applies to each individual job
  • Fixed term employees can be furloughed, but if you were not going to renew the contract, they cannot be furloughed after the contractual end date

Furloughed employees must not carry out any work. Employees who are working reduced hours or for reduced pay are not eligible.

Sick or self-isolating employees are entitled to sick pay, you cannot claim a furlough payment for them

Eligible individuals who are not employees

  • Office holders, company directors and salaried members of an LLP can be furloughed if they are paid via PAYE. Where such a decision is taken this should be passed as a resolution of the company and communicated in writing to the director/office holder.
  • Agency workers can be furloughed where they are paid through PAYE. The agency should be the entity that furloughs the employee.

What work can a furloughed employee do?

A furloughed employee can do volunteer work which does not provide services to or generate income on behalf of the employer claiming the furlough payment. They can also take part in training courses. Indeed, the government is encouraging furloughed employees to undertake training.

If your employee is on maternity leave, adoption leave, paternity leave or shared parental leave

If you provide contractual entitlements to employees on maternity, adoption, paternity or shared parental leave over the statutory entitlement, you can claim for this enhancement under the scheme.

Agreeing to furlough employees

You must confirm to the employee in writing that they have been furloughed and keep this record for five years.

How much can you claim?

  • You can claim for 80% of the employee’s wages, up to a maximum of £2,500, and the minimum auto-enrolment employer pension contributions (3%) on the reduced wage.
  • Claims start from the time that the employee finishes work, not when the decision to furlough is made or when they are written to about the furloughed status.
  • For employees whose pay varies you claim the higher of:
    • The same month’s earning from the previous year; or
    • Average monthly earnings for 2019-20.

If the employee has been employed for less than 12 months, you can claim for 80% of the average monthly salary since they started work.

Employer National Insurance and Pension contributions

You will need to pay employer National Insurance and pension contributions but these can also be claimed (subject to the 3% limit on the pension claim).

Benefits in Kind, Salary Sacrifice Schemes, Apprenticeship Levy and Student Loans

You can claim for regular payments that you are obliged to pay the employees, including compulsory commission payments. Discretionary bonus/commission payments cannot be claimed.

You cannot claim for non-monetary benefits and benefits provided through salary sacrifice schemes. HMRC have confirmed that Covid-19 is a life event which could warrant a change to a salary sacrifice scheme

You will have to continue to pay the Apprenticeship Levy and Student Loans.

What you’ll need to make a claim:

  • 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 three consecutive weeks)
  • Your bank account number and sort code
  • Your contact name
  • Your phone number

You will need to calculate the amount you are claiming. HMRC retain the right to retrospectively audit all aspects of your claim.

Employees can be furloughed for a minimum period of 3 weeks and can be furloughed multiple times. Once the claim is submitted, HMRC will check this and pay it to you via BACS.

The full details of the Government’s Coronavirus Job Retention Scheme for employers can be found here.

Need to talk to us?

If you have any queries about the above or wish to speak to a member of our Employment Law team then please telephone 01892 526344 or email enquiries@berryandlamberts.co.uk.

For further information on all our Commercial & Dispute Resolution services, please click here.

Whilst our offices are closed to the public during the coronavirus pandemic, we are offering a telephone appointment service which gives you one hour of time with a solicitor for £100 + VAT. Please get in touch if you feel this type of appointment would be beneficial.

 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.