Latest news from Government, who have updated their website with further details for the Coronavirus Job Retention Scheme. 26 March 2020.
A summary of that information is below, but much more comprehensive information can be found on the Government website, by clicking here: gov.uk/guidance
The scheme is expected to be up and running by the end of April and is designed to support employers whose operations have been severely affected by coronavirus (COVID-19)
A portal will be created and employers can claim for 80% of the usual monthly wage of furloughed employees' (employees on a leave of absence), of up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 or before 28 February 2020. It will run for at least three months starting from 01 March 2020, so claims can be backdated to that date, if employers have had to furloughed staff.
Employers can claim for
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero hour contracts
Eligibility
To be eligible for this subsidy, when on furlough, an employee can not undertake work for or on behalf of the employer. Whilst on furlough, the employee's wage will continue to be subject to usual income tax and other deductions.
Where an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme. If they are, then employers will have to continue paying the employee through the payroll and pay the salary subject to the terms of the employment contract.
Employers should write to their employee(s) confirming that they have been furloughed and keep a record of this communication. Employees hired after 28 February 2020 can not be furloughed or claimed for in accordance with this scheme.
The government will issue more guidance later, on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.
To make a claim for the scheme, employers will only be able to make a backdated claim once every three weeks, which is the minimum that an employee can be furloughed for. Employers should make the claim in accordance with actual payroll amounts at the point that the payroll is run or in advance of an imminent payroll.
Employers must pay all the grant that is received to the employee for their gross pay, no fees can be charged from the money that is granted. Employers can also choose to top up the employee's salary, but do not have to.
When the government ends the scheme, employers must make a decision, depending on circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy)
For employee's that are furloughed, they have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.
Please note:
Payments received by a business under the scheme are made to offset deductible costs. They must therefore be included as income in the business's calculation of its taxable profits for Income Tax and Corporation Tax purposes, in according to normal principles.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.