Coronavirus Job Retention Scheme the facts
As part of its response to the COVID-19 pandemic the government introduced the Coronavirus Job Retention Scheme and here are some facts.
The scheme allows all UK employers with employees on a PAYE scheme to designate those employees as ‘furloughed workers’.
Employers have access to Government support to continue paying part of these furloughed employees’ salaries and potentially protect the employees from redundancy.
The first phase of the scheme finishes at the end of June and will close completely at the end of October.
What is furlough?
The word ‘furlough’ generally means temporary leave of absence from work. This can be due to economic conditions affecting one company, or matters affecting the whole country. of employment law have changed, simply that this scheme adds to them.
Furlough leave has been temporarily introduced by the government to provide employers with an option to keep employees on the payroll without them working; while working reduced hours is allowed under the flexible extension.
Ending of the scheme
The Coronavirus Job Retention Scheme was originally scheduled to finish at the end of June. This has been extended until the end of October.
It is critical for employers to understand the relevant dates and the fine detail. The key dates are outlined below.
The final date by which an employer can furlough an employee for the first time was 10 June. The full furlough scheme closes to new entrants on 30 June but there must have been a full 3-week furlough period completed before then for employees to continue to qualify.
Closure to new entrants from 30 June
From 1 July claims are restricted to employers currently using the scheme for employees who they have previously furloughed before 10 June.
This means the only employees who can be furloughed are those who have already completed a full three-week furlough period before 30 June.
There is a further deadline of 31 July to make any claims for staff furloughed during the March to June period.
The only exception to the 10 June cut-off date is for parents on statutory maternity leave who plan to return to work in the coming months; the Government has confirmed these employees will be eligible for the extended furlough scheme if their leave periods ends after the 10 June cut-off date.
This applies to statutory paternity, adoption, shared parental, and parental bereavement leave too.
From 1 July the furlough scheme becomes more flexible before it ends completely on 31 October 2020.
The flexible scheme applies to employers currently using the scheme for previously furloughed employees.
Employees will continue to receive 80% of their salary, subject to the cap, but employers will need to share the burden of paying NI and furlough salaries from August onwards.
As under the original scheme, employers can top up the wages above the grant for fully furloughed staff if it is feasible for them to do so.
Employees can work part-time under the revised flexible scheme.
The capped figures on the furlough pay will apply in proportion to the hours not worked.
There are now the following five stages for flexible furlough:
From 10 June the furlough scheme is effectively closed for employees who have not been previously furloughed.
Until June 30 employers can claim for 80% of furloughed employees current salary, up to £2,500 but the employee must not work for the employer.
Employer National Insurance Contributions and certain pension contributions can be claimed too. Employers are not required to contribute anything towards furloughed employees’ salaries for June.
The new flexible scheme applies only for previously furloughed employees. These people can now return to work part time, but employers can still claim the grant for normal hours not worked.
Any amount of working time and any shift pattern can be agreed with the previously furloughed staff. Until July 31 employers can still claim for 80% of the furloughed employees’ current salary, up to £2,500 as well as employer National Insurance Contributions and pension contributions.
This only applies for the hours the employee doesn’t work. Employers must pay employees for the hours they work.
The main change is that from 1 August, employers will have to pay employee’s National Insurance Contributions and pension contributions and can no longer claim a grant for these.
Until August 31 the government will pay 80% of furloughed employees wages up to a cap of £2,500 for hours not worked.
Employers must pay employees for the hours they work. Employers funding of employers’ NICs and pension contributions applies to both the hours not worked and hours worked if any.
From 1 to 30 September the government will pay 70% of furloughed employees wages up to a cap of £2,187.50 for hours not worked.
Employers will pay 10% of wages to make up 80% total up to a cap of £2,500 plus employers’ total NICs and pension contributions.
From 1 October until the end of the scheme on 31 October the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work.
Employers will pay 20% of wages to make up the 80% total up to a cap of £2,500 plus employers’ total NICs and pension contributions.
Which employers are eligible?
Any employer (of any size) is eligible for the scheme. This includes:
- recruitment agencies (if the agency workers are paid through PAYE)
- public authorities.
To be eligible the employer must have created and started a PAYE payroll scheme on or before 19 March 2020 and have a UK bank account.
Which employees are eligible?
The employees that can agree to being furloughed are those working for employers whose businesses have been severely affected by coronavirus.
The furloughed employees must have been on the employer’s PAYE payroll on 19 March 2020, including:
- full-time employees
- part-time employees
- agency employees on agency contracts (provided they are not working at all)
- zero-hour contract workers (provided that they are employees albeit on flexible contracts).
Employers will need a Government Gateway ID and password and an active PAYE enrolment to access the system to make a claim.
If you need help with creating or issuing your claim, please speak to us here at The Hollies on 01743 790086.
For the latest information, employers should check the Government website