On 20 March as part of these efforts the Chancellor announced the Coronavirus Job Retention Scheme, a temporary scheme open to all UK employers including charities and non-profits for at least three months starting from 1 March 2020. The scheme is due to be up and running by the end of April.This funding will be open to all employers with a PAYE payroll scheme that was created and started on or before 28 February 2020, including charities.and can be on any type of contract.
Workers recruited after 19 March 2020 cannot be furloughed or claimed for.
Employers can apply for grants of 80% of furloughed employees’ (employees on a leave of absence) monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage, provided they keep the worker employed. The scheme will cover the cost of wages backdated to 1 March 2020, if applicable.
Furloughing means keeping them on payroll but placing them on a leave of absence during which they do not work for your business.
The employer needs to get agreement from the worker to do this, unless it’s covered by a clause in the employment contract.
Any furlough agreements should be in writing.
The employer can decide who to designate as a furloughed worker. If an employee disagrees with their employer’s decision they’ll need to talk to their employer and try to come to an agreement.
To be eligible for the grant, furloughed employees cannot work for or on behalf of the organisation or business including providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and employers have to continue paying the employee through payroll and pay their salary subject to the terms of the employment contract you agreed.
If you placed your employees on unpaid leave after 19 March 2020 to deal with the impact of COVID-19, they can be furloughed and be eligible for the scheme. If they were put on unpaid leave before 28 February 2020, they are not eligible for the scheme.
Directors of limited companies can use the scheme to access a grant for themselves if they are registered under PAYE payroll scheme. If the scheme doesn’t apply, the government has encouraged directors to look at other support such as the Coronavirus Business Interruption Loan Scheme.
You can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until 1 March 2020 if applicable.
Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.
You must pay the employee all the grant you receive for their gross pay and no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.
When the government ends the scheme, employers must make a decision as to whether employees can return to work. If not, it may be necessary to consider redundancy.
More detailed guidance will be published in due course and please be assured we will advise you when the scheme is open.