Coronavirus Job Retention Scheme (Furlough)
Who can claim? Any organisation with employees can claim, including but not limited to, charities, recruitment agencies and public authorities. The size of the organisation is not a factor that is considered.
What can a company claim? If a company is unable to maintain its current workforce because operations have been severely affected by coronavirus, they can furlough employees and apply for a grant that covers 80% of the usual monthly wage cost (up to £2,500 a month). A company can also claim NI contributions and minimum automatic enrolment employer pension contributions on that wage. The income per employee is calculated by taking the average income over the las three years.
Can all employees can be furloughed? No, a company can only furlough employees that were on their PAYE payroll on or before 19 March 2020, any employees hired after this date cannot be furloughed and are unable to claim under this scheme. The employer must have notified HMRC of the employee on an RTI submission by 19th March. Employees on any type of employment contract can be furloughed including, full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are also eligible. Employees must be consulted and agree to be furloughed as it is a change to the terms and conditions of their employment. The scheme is not limited to those employees who would otherwise be made redundant.
Does the employer have to top up the 80%? No, an employer may choose to top up the payment so their employee receives to 100% of their salary, but they are not obliged to do so.
When will HMRC pay the grants? HMRC is in the process of getting this scheme up and running and are aiming to get the first grants out by the end of April 2020.
Can employees start a new job whilst on furlough? Yes, employees can start a new job meaning they might end up earning 80% of the old salary and 100% of a new one. If an employee was to do this, they must ensure their old employment contract allows this. If not, they must first obtain consent from their employer.
Can an employer reclaim compulsory commission from HMRC? Yes, an employer can reclaim 80% of compulsory commission back from HMRC as well as an employee’s basic salary. This commission can only relate to past sales and new sales cannot be completed while on furlough.
Does the 80% include non-monetary benefits? No, for example the value of health insurance or a car fall outside the 80%.
Can a company director be furloughed and still perform statutory duties? Yes, a company director can be furloughed and perform statutory duties however, they must not complete any other work for the company.
Can an employee be furloughed multiple times? Yes, an employee can be furloughed, brought back to work then re-furloughed. The employee must however remain furloughed for a period of at least three weeks.
Can a company furlough someone who has recently been made redundant? Yes, the business can re-employ the individuals who have been made redundant since 1st March and then furlough them.
Can I dismiss an employee during or immediately after the furlough period? Yes, an employee can be made dismissed or made redundant while on furlough or immediately after. There is no requirement to bring an employee back to work after the period of furlough. An employee can still bring an employment claim against a company if they are dismissed during a furlough period.