Firstly, note the National Minimum Wage increases from April 2020.
Guidance from the Government on its Job Retention Scheme (JRS) have been updated. The main points are as follows:
Who can be Furloughed?
- Those who cannot work due to providing care (e.g. for children), but there is still work available CAN be furloughed.
- Apprentices can be furloughed. Any time spent training should be paid at the appropriate minimum wage for Apprentices.
- Further guidance for managing Apprentices can be found here.
- Those made redundant AFTER 28.02.2020 can be taken back on and placed on furlough leave. My advice would be to bear in mind the reasons for redundancy, if it was purely related to COVID-19 and you’re likely to be able to offer them work once this is all over, then take back on and Furlough. If it was for another reason, and the rationale for redundancy remains, even when this is over, you will likely have to go through the whole process again. If you’re in this situation, let me know and I will advise separately.
- Those ‘Shielding’ on public health guidance can be furloughed, even where work remains. Although do consider if work can be carried out from home.
Note that you need not furlough your whole workforce if some work remains, however, when making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
Other types of workers
Eligible workers who are not employees, e.g. Company directors, construction workers who companies make deductions on their behalf, see the guidance.
Your employees can volunteer for other organisations if furloughed by you.
Volunteering can be carried out for your own organisation as long as it does not generate revenue or income and they are not providing ‘services’ for you. “Your organisation can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.”
If on sick leave or self-isolating – Statutory Sick Pay.
You cannot claim for employees if they are getting SSP but they can be furloughed and claimed for once they are no longer receiving SSP.
Maternity leave / any kind of parental leave
Normal rules re maternity leave and pay etc continue. If you pay any kind of contractual enhanced pay, this can be claimed under the JRS.
What can be claimed under the JRS?
It was not clear previously what payments, if any, could be claimed aside from basic pay. The guidance is now clearer on what can be included in the 80% pay calculation and claimed under the JRS.
- For full time and part time employees – 80% of wage.
- For employees whose pay varies:
- If the employee has been employed for 12 months or more, claim the highest of either the:
- same month’s earning from the previous year
- average monthly earnings for the 2019-2020 tax year i.e. 6 April to 5 April
- If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work.
- If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80%.
** Past Overtime, Fees, Commission, Bonuses and non-cash payments **
- You can claim for 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.
Note that those on salary sacrifice schemes CAN switch out the scheme and take advantage of the higher wage. Do ensure that an amendment to contract is in place – I can help with this.
Working for others
There’s been much debate over this – your employee is furloughed, then they get a job elsewhere (commonly with a local supermarket) and earn a wage there too. This IS allowed under the new scheme as long as the employment contract allows it.
Note that if the employee takes a second job, they are still liable for tax and NI contributions in the same way as usual. A New Starter Checklist (the old P46) should be completed and Statement C selected.
Bear in mind that if you have furloughed them and then want them back, they are obliged to return. If not – contact me!
- Grants can be claimed via new portal which is currently being set up.
- You will on or around your payroll date.
- Payments will be made to organisations by BACS to a UK bank account.
- Grants cover 80% of wages and employer NI Contributions and minimum auto enrolment employer pension contributions.
- Covers those on your PAYE on 28.02.2020.
- The organisation must be registered for PAYE.
- You will need to have the following to hand to claim:
- ePAYE reference number
- number of employees being furloughed
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- bank account number and sort code
- contact name
- 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.
Misc / Admin stuff
- Do ensure that you talk to your employees and get a Furlough Agreement in place. This is essentially a change in employment terms.
- If you are considering dismissing (this including making redundant) 20 or more people you are required to consult collectively – contact me if this is the case.
- Keep these records for FIVE YEARS.
- Grants received under the JRS should be declared as income in the normal way.
- Apprentice Levy and Student Loan payments continue. The JRS does not cover this.
- Company car tax still payable at 100% even if employee is on 80% pay under Furlough.
- Rights to SSP, Maternity and Parental rights, rights to unfair dismissal and redundancy payments, along with other employment legislation still applies.
- Redundancy payments cannot be claimed under the JRS.
- If you used the Furlough Leave Agreement I provided (including the bit on working for others) and want to retract any points, write to your staff (email fine) saying that the guidance has changed and that you’re happy for them to start a new job.
- Furlough should be for at least three weeks. If you are considering rotating furlough leave for staff (i.e. 3 weeks furlough, 3 weeks working) then ensure the Furlough Leave Agreement covers this to save having a new agreement each time.
- If you’re still paying 12.07% on top of salary for holiday – don’t! Contact me for advice.
Full update provided here.