THE HEADLINESTHE ANNOUNCEMENT
At the Budget 2020, the Chancellor announced an unprecedented package of measures to seeing companies receive grants to pay their workers 80% of their salaries up to a limit of £2,500 per month.
The grant would be for those that can no longer work due to restrictions as a result of the outbreak, but would be retained as employees by their employer. i.e. "Furloughed Workers"
This scheme has probably seen the most changes and clarification being issued since its launch, together with a very similar scheme for Self employed and freelancers being launched (this scheme does not cover Self employed)
Employers can claim 80% of furloughed workers (employees on leave of absence) usual monthly wage costs, up to £2,500 per month, (£576.92 per week) per employee, plus the associated Employer National Insurance contributions and minimum automatic enrolment pension contributions on that wage
The following are not eligible under this scheme;
IMPORTANT - CAUTIONARY NOTE: We recommend you seek professional legal advice in respect of employment contracts and the ability to furlough employees - a change to their employment contract may be required, depending of the terms
WHENThe scheme will cover the cost of wages backdated to 1 March 2020, and was initially open for 3 months. This has now been extended to 30 June 2020
The scheme can be used at anytime during this period, and opened for claims on 20 April 2020
IMPORTANT - CAUTIONARY NOTE: We recommend you seek professional legal advice with regards the selection to employees to furlough
HOW TO APPLYTo access the scheme you need to:
We recommend you seek professional advice in respect of furloughing workers and the terms of contracts of employment, and read the detailed guidance provided by HMRC and the Government below.
DETAILED GUIDANCE AND UPDATESGUIDANCE FOR EMPLOYERS
Ahead of the portal opening, HMRC launched its calculator tool to help firms identify the level of grant they are entitled too through the scheme
Here is a link to the the calculator tool >
Check if you can claim for your employees wages through CJRS - Latest guidance for employers (updated 17 April 2020)>
There is also new guidance (published 17 April 2020) on how to calculate the 80% of wages for furloughed employees to claim through CJRS, see the guidance here >
Together with a Step by Step guide to making a claim, together with examples of claims can be found here >
GUIDANCE FOR EMPLOYEES
Check if your employer can use CJRS - Latest guidance for employees (updated 17 April 2020)>
FRAUDULENT USE OF THE SCHEME & WHISTLE BLOWINGHMRC has confirmed that:
REPAYMENT AND FEESThis is a grant scheme so there is no repayment.
FREQUENTLY ASKED QUESTIONSARE DIVIDENDS COVERED?
The scheme does not cover dividends, only salaries through the PAYE system
WHO MAKES THE CLAIM AND WHO RECEIVES THE MONEY?
The employer makes the claim, and receives the monies as a reimbursement of employees wages
WHAT IF I HAVE MORE THAN ONE JOB ?
While we understand that an employee who is furloughed can do no work at all, our current understanding is that the employee can hold a separate employment with a different and unconnected employer which will be unaffected.
WHAT IS A 'FURLOUGHED EMPLOYEE'?
“Furloughed” is not a term normally used in UK employment law. The Direction now sets out the definition of “furloughed employee” in paragraph 6.1 of the Direction:
“An employee is a furloughed employee if:-
(a) the employee has been instructed by the employer to cease all work in relation to their employment,
(b) the period of which the employee has ceased (or will have ceased) all work for the employer is 21 calendar days or more, and
(c) the instruction is given by reason of circumstances arising as a result of coronavirus or coronavirus disease.”
A furloughed employee will remain on the employer’s pay-roll if they are furloughed but they should not undertake any work for the employer during this time.
CAN AN EMPLOYEE GO ON AND OFF FURLOUGH?
The minimum length of furlough is three weeks (21 calendar days) but an employee can be furloughed more than once. This means they can go on and off furlough subject to the three week minimum. Accordingly it would be open to employers to rotate employees on to furlough.
IS IT A REQUIREMENT THAT THE EMPLOYER PAYS THE 80% OR £2,500 CLAIMED?
Yes. The Direction states (para 7.1(b)(ii)) that if the employee is being paid less than £2,500 they must be paid “an amount equal to at least 80% of the employee’s reference salary”.
Paragraph 7.12 of the Direction goes on to provide that if between the 1 March and 18 April the employer has paid the employee less than 80% of their regular wages as required under the Direction (for those on less than £2,500) then the employer can pay the difference and it will satisfy the requirement of the Scheme.
CAN AN EMPLOYER CLAIM FROM HMRC BEFORE IT ACTUALLY PAYS THE EMPLOYEE?
The Direction states that the employer can claim for earnings which it “reasonably expects to be paid”. However, it cannot claim for any salary which is “conditional on any matter”. This seems to permit the employer deferring payment to the employee in order to claim the reimbursement but prohibits any arrangement whereby the employee was only entitled to be paid on condition the reimbursement is received from HMRC.
COULD AN EMPLOYER ASK VOLUNTEERS TO GO ON FURLOUGH ?
FURTHER GUIDANCEGuidance for Employers by Federation for Small Business >
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