This weekend HMRC published further details of how the Coronavirus Job Retention Scheme should be applied.
They have not yet said when the portal will be open. It states that it expects the portal to “be available by the end of April 2020”.
You can read the revised guidance at: Updated HMRC Guidance
I have combined the additional guidance (in green) to the key points I sent to you last week:
- The scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020
- Any organisation with employees can apply
This includes charities, recruitment agencies and public authorities. The government does not expect public sector employers to use it as long as central government continues funding wage costs in the normal way. With agency employees, the scheme is only available for agency employees who are not working.
- Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer NICs and minimum auto-enrolment pension contributions on that wage.
- The 80% includes any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.
- you cannot claim for non-monetary benefits (e.g. the value of health insurance or a car).
- You can choose to top up to 100%, but do not have to.
- For employees whose pay varies, the employer can claim for the higher of
- the same month’s earning from the previous year (e.g. earnings from March 2019); or
- average monthly earnings in the 2019-20 tax year
- individuals are only entitled to the minimum wage for the hours they work. When they are furloughed and do not work, if 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However, they are entitled to be paid NMW for any time spent training.
- To be eligible, the employee must have been on the payroll on 28 February 2020. If they were hired later, they are not eligible.
- Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put on the scheme.
- Employees who stopped working for you on or after 28 February 2020 can be re-employed and put them on the scheme.
- Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding.
- The guidance confirms that employees can be furloughed brought back to work, then re-furloughed (subject to each furlough period being at least three weeks)
- The employee must not be working at all for the employer. If they work for even an hour during their entire three week furlough period, they are not eligible.
- You cannot ask your employee to do any work that:
- makes money for your organisation
- provides services for your organisation
They can take part in volunteer work or training.
- Employees CAN start a new job when on furlough (meaning they might end up earning 80% of the old salary and 100% of a new one). This was not prohibited in the earlier guidance, but the new guidance expressly allows it. The employee will need your permission first if the contract of employment requires it.
- When agreeing the change to Furloughed Status (and the acceptance of 80% pay), assuming the contract does not already allow for that, normal employment law applies – i.e. you will have reach agreement with your employee or change the contract by either a right given by a clause in the contract or terminate the contract and re-employ on a new contract. You must be careful not to discriminate in deciding who to offer furlough too.
- Employees on sick pay or self-isolating cannot be furloughed, but can be furloughed afterwards.
- Company directors can be furloughed. They can still perform their statutory director duties, but not other work for the company.
- Apprentices can be furloughed.
- Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed.
- Employees who are “shielding” (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant.
- Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme.
- Employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed.
- Workers who are paid through PAYE can be furloughed and receive support through this scheme.
- You can only claim once every three weeks, i.e. you cannot get weekly reimbursement.
- Claims can be backdated to 1 March 2020.
- You MUST confirm in writing to your employee that they have been furloughed. A record of this communication must be kept for five years.
To claim, you will need:
- 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 3 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 will retain the right to retrospectively audit all aspects of your claim.
Lots of areas remain unclear. For example:-
- What do ‘statutory duties’ actually cover for company directors?
- Are employees who TUPE into a business after 28 February covered?
- Can employees take annual leave when on furlough, and what should they be paid?
More guidance is expected from the Department of Business, Energy and Industrial Strategy. I will keep you updated.
For those who are not on our HELP! package we now offer support packages for employers who need fixed priced advice and assistance.
If you have any particular queries please do not hesitate to contact David Scott.