The Government introduced the Coronavirus Job Retention Scheme (CJRS) as a direct response to the economic impact of COVID – 19 on businesses.
The main purpose of the scheme is to help businesses that been severely affected by the coronavirus crisis maintain their current workforce.
The scheme enables employers to apply to HMRC for a grant to cover 80% of employees' salaries.
Employers are only able to claim in respect of those employees who have been furloughed.
Employees must not perform any work for their employer while they are on furlough as this is expressly prohibited under the scheme.
The scheme has been open from 1st March until 30th June unless the Government extends it further.
Employers must use an online portal to make a claim which has been available since 20th April 2020.
Jump to your question:
It is a temporary scheme introduced by the UK Government to help those employers who have been adversely affected by the Coronavirus outbreak.
Employers can claim 80% of an employee's salary up to a maximum of £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on a subsidised wage.
To make a claim, affected employees must be designated as a "furloughed worker" and be placed on furlough leave with confirmation of this in writing.
You should also obtain an employee's consent to reducing their pay, ideally in writing if you do not choose to top up their salary.
The Scheme has been open since 1 March 2020 and is due to end 30 June 2020 unless it is extended further by the Government.
No they don't.
However, HMRC does have the right to audit all claims made under the Scheme retrospectively and will have the power to claw back any fraudulent claims
The term furlough does not have any prescribed definition in law.
However, in the context of the Job Retention Scheme "furloughed", means where an employee is kept on the payroll but placed on a temporary leave of absence where they are not required to work.
An employee must be furloughed for a minimum of three consecutive weeks.
The Scheme is open to all UK employers regardless of their size who have a UK bank account, had a PAYE payroll system on or before the 19 March 2020 and have enrolled for PAYE online
This includes the majority of businesses, charities, not for profit organisations, public sector organisations and also recruitment agencies with agency workers paid through PAYE.
If a company is in administration, the administrator can also apply for support under the Scheme.
Where employers are receiving public funding, they should use these funds to continue to pay staff and not furlough them.
The Scheme applies to all employees on the employer's PAYE payroll on or before 19 March 2020 engaged on any type of contract including full-time, part-time, flexible or zero-hours contracts and those on agency contracts.
It also applies to Apprentices, salaried company directors and salaried LLP members provided they are paid via PAYE.
The Treasury directions issued on 15 April stated that that there must be an agreement in writing between an employer and an employee for the employee to cease all work for the employer.
We, therefore, believe the safest approach is obtained their consent using detailed furlough agreement.
If you require a furlough agreement, then please contact us.
You will need to do the following:
You must keep a copy of any written communications with an employee about being furloughed for up to for five years including any copies of a furlough agreement.
You should also keep a record of all claims made under the Scheme.
No, they cannot do any work for you or another linked or associated business.
Employees are being encouraged to report their employer if they are being asked to work while on furlough, or if they are aware of fraudulent behaviour concerning the Scheme
No they cannot.
They can make a request, but you do not have to agree. It is your decision as to which employees to place on furlough.
Normal employment law principles still apply, so you need to ensure that decisions are not discriminatory.
Yes as long as each employee is furloughed for a minimum of three consecutive weeks at a time.
Yes, they can be furloughed multiple times as long as each period of furlough is for a minimum of three weeks.
Whenever you bring an employee back off furlough and wish to furlough them again, you must notify them in writing.
Yes, but you must ensure that any such activities do not provide services to, or generate revenue for, your business.
If you require any furloughed employees to undertake training, then they must be paid no less than the National Living Wage/National Minimum Wage.
80% of an employee's usual monthly wage costs or £2,500 per month, whichever is lower.
You can also claim for the national insurance contributions and the minimum automatic enrolment employer pension contributions you are liable to pay.
No you are not, but you can do so if you wish.
If you do not top up an employee's pay, then you should obtain the employee's agreement to the reduction in pay while on furlough.
For salaried employees, you should use the employee's gross salary in the last pay period prior to 19 March 2020 to calculate 80% of the pay for salaried workers.
If you have based the salary calculation on pay at 28 February 2020 as per previous HMRC guidance, then you can use this calculation for the first claim if there is a difference
You should only include regular payments you are required to make to an employee such as their usual wage, past overtime and contractual commission payments.
You should not include discretionary bonus and commission payments or the cost of benefits.
For those employed for 12 months or more, you can claim the higher of:
If they have been employed for less than 12 months, then you can claim for an average of their monthly earnings since they commenced work.
In both instances, past overtime can be included in these calculations.
Yes, but the grant will subsidise these costs
You can furlough employees on sick leave for short term absences if there are business reasons to do so.
Employees who are shielding or self-isolating in line with public health guidance can also be furloughed.
In both cases, they should not receive statutory sick pay and receive furlough pay.
You can also furlough employees on long term sick provided that they have exhausted their entitlement to SSP.
Yes if they started unpaid leave after 28 February 2020.
However, if they went on unpaid leave on or before 28 February 2020, they cannot be furloughed until the agreed return date.
Yes.
Employees who are unable to work because they have child-caring responsibilities due to the impact of COVID -19 can be furloughed.
Yes they can, subject to the terms of their employment contract which may require them to obtain consent from their employer.
Given the current circumstances, employers should consider relaxing any such restrictive contractual provisions.
The guidance is also very clear that the employee must not carry out any work for associated business linked to the furloughing employer.
Yes, they can be furloughed by one employer and continue to work for another.
Two different employers can also furlough the employee at the same time.
Yes it does.
There is currently a lot of debate in the legal sector on this point, and the position needs to be clarified by further government guidance.
If you compel an employee or even obtain their agreement to take annual leave whilst being furloughed then you will have to pay them their full rate of pay % for any annual leave taken during a period of furlough.
At present, we believe the safest approach is for employers is not to require employees to use their annual leave during furlough.
If the employee is contractually entitled to bank holidays as per their contract then you should either pay them in full for that bank holiday or allow them to take a day's leave in lieu at a later date.
Yes, but only if an employee was made redundant on or after the 28 February 2020.
If this is the case, then such employees can be re-employed, placed on furlough and then you can make a backdated claim for their wages under the Scheme.
Unfortunately, any employees who were made redundant before 28 February 2020 will not be covered under the Scheme.
Yes they can be furloughed.
You can also renew or extend their contracts during the furlough period as long as the extension takes place before the expiry of the fixed term.
Employees can be made redundant while on furlough.
However, you must undertake a fair process as per normal Employment Law principles to avoid any claims of discrimination or unfair dismissal.
Yes you can.
Yes, provided they are paid via PAYE, do no more than their limited statutory duties as an officeholder and do not perform any business-related services or revenue-generating work.
This is a quite complicated area.
The Treasury Direction appears to suggest that employees on maternity leave can be furloughed.
But you can only claim for enhanced contractual maternity pay.
You cannot claim for any statutory maternity pay must continue to pay this to an eligible employee and reclaim in the usual way.
If an employee's entitlement to maternity pay has been exhausted, and they agree to be furloughed this will result in their maternity leave coming to an end.
The same rules apply to other types of statutory family-related leave.
The guidance also makes it clear that when calculating furlough pay for an employee returning from any statutory family leave it must be based on their normal salary, not the pay they received while on leave.
New regulations came into force on 25 April 2020 requiring that any statutory pay for maternity leave, paternity leave, adoption leave, shared parental leave and parental bereavement leave must now be based on the pay an employee would have received had they not been placed on furlough.
This ensures that such employees will not be disadvantaged if they are on a lower rate of furlough pay during the relevant period for determining their statutory pay.
Yes, they can, but they must be paid via PAYE and working in the UK.
No they cannot, but the Government has put in place support measures for such employee details of which can be found here.
The information set out in the FAQ's above are for general information only and under no circumstances should be use as a substitute for legal advice. Please note that due to the frequency of the announcements from Government about Covid-19 information on this page may change and require updating. Any information on this page should therefore not be regarded as comprehensive or relied upon when making decisions and you should always take legal advice which is relevant to your specific circumstances. Neathouse Partners accepts no responsibility for any loss or damage arising from any action taken or not taken by anyone using the information detailed on this page.