April 20, 2020
Fflur Jones, Head of Employment & HR at Darwin Gray shares this quick guide to what we now know about the key rules of the scheme, which has now been extended until at least 30 June 2020.
Who is eligible? Employers who had a payroll system on 19 March (previously 28 February) 2020 can take part, and any employee who was on their payroll on 19 March is eligible to be furloughed and have 80% of their salary reclaimed. This includes directors, casual workers, apprentices and agency workers as well as normal permanent staff. Staff could be furloughed if they can’t work because their workplace is shut, there’s a reduced need for their role or they have to stay at home to shield or look after dependants during the crisis.
How do you furlough staff? Instructions issued by the Treasury on 15 April now state that furlough must be agreed in writing (this is an important new rule for employers to be aware of). This means employers need to write to employees setting out the details of their proposal for furlough, which needs to be agreed by the employee in writing. This doesn’t need to be signed consent though – email is fine.
What costs can employers reclaim? This is still 80% of the employee’s gross monthly wages (capped at £2,500), plus the NI and statutory pension contributions on that amount. We now know that bonuses, discretionary commission, other benefits and salary sacrifice payments can’t be included. Employers need to agree with staff whether or not those extra payments will still be made and whether their salary will be topped up to 100%.
How does furlough interact with sickness absence and holiday? It’s now been clarified that employees can be switched between furlough and sick leave if they are ill, but this will be at the employer’s discretion. Staff can still take holiday while on furlough too.
What can employees do while on furlough? They must not do any work for the employer. However, they can do volunteering in the community or training – and can even work for other employers. We now also have guidance on how apprentices can carry on their training while furloughed.
How do claims work? The claims portal opened on 20 April 2020. Details about the information employers need to submit to HMRC can be found at https://www.gov.uk/government/publications/coronavirus-job-retention-scheme-step-by-step-guide-for-employers. Claims can be backdated to 1 March 2020 for any staff who have been off work since then. Employers should be careful to submit the correct information and keep any documentation for 5 years, as HMRC may retrospectively audit claims.
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