Update: Coronavirus Job Retention Scheme and Furloughing

April 6, 2020

 

The Government has published an update that has clarified some grey areas on the newly established Job Retention Scheme.

This is a temporary scheme in place for 3 months, but may be extended if necessary, to support employers and businesses that may be severely affected by COVID-19. Employers can furlough employees and apply for a grant that covers 80% of their usual monthly wage, up to £2,500 a month.

These are the main points clarified by the Government on 4 April 2020:

  • Employees can start a new job when on furlough leave. This means that they might end up earning 80% of the old salary and 100% of a new one. The new guidance does say however that this must be allowed under the employee’s employment contract.

  • An employer can reclaim 80% of fees from HMRC and 80% of compulsory contractual commission from HMRC, as well as basic salary. However, the 80% does not include non-monetary benefits such as the value of health insurance or a car.

  • It is possible for salaried company directors to be furloughed and receive support through this scheme. This would not prevent them from carrying out their statutory duties however, they could not do work of a kind they would carry out in normal circumstances to or on behalf of their company.

  • Employers are entitled to furlough their employees multiple times, meaning that an employee can be furloughed, brought back to work, and then re-furloughed – provided that each furlough period lasts at least three weeks.

  • Employers must notify employees of their furlough status in writing and keep the record of that written notification for five years.

Although this update has clarified a lot of uncertainties surrounding the functioning of the scheme, there remains to be some unanswered questions.

We will be updating our news pages in accordance with the Government’s guidance over the upcoming weeks as more clarification will hopefully be announced by both HMRC and the Government.

 

 

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