Last month, the Chancellor of the Exchequer Rishi Sunak announced that the UK government would pay the wages of furloughed employees during the coronavirus pandemic. With many businesses having to shut down due to COVID-19 leaving thousands of employees unable to work, who is eligible, and what are the terms and conditions of the furlough scheme?
What you need to know about the Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme was introduced to help support businesses, families, and individuals during these unprecedented times. It has been implemented in a bid to protect workers from being made redundant if the business they work for has to shut down, and they are unable to work.
The Job Retention Scheme is open to all UK employers with pay as you earn (PAYE) systems created on or before March 19, 2020, who indicate their workforce as furloughed. Originally the cut-off date to qualify for the scheme was February 28, 2020 but on April 15 the government announced this would be extended to allow thousands more workers to be eligible. The scheme is initially open for three months, until June, but will be extended if necessary.
The HMRC will pay up to 80% of an employee’s usual wage, up to £2,500 a month plus the associated Employer National Insurance contributions and minimum enrolment employer pension contributions on the subsidised wage. The scheme will also cover the cost of wages backdated to March 1, if applicable.
The HMRC is working hard to deliver the scheme, which should be fully operational by the end of April.
Who is eligible for the Coronavirus Job Retention Scheme?
To be eligible for the scheme your business must:
- Be a UK based company with a PAYE scheme.
- Have been set-up or started on or before March 19, 2020.
- Have a UK bank account.
How can employers apply for the coronavirus Job Retention Scheme?
To access the scheme as an employer you must designate affected employees as furloughed workers and inform the employees they have been furloughed. Then you must submit the information about your furloughed employees and how much they earn to the HMRC via their new portal.
If you are furloughed can you get another job?
According to the government, furloughed workers can work for a second company and this will not breach any of the contractual obligations of the Job Retention Scheme. However, it is best to check with your employer before seeking out other employment so as not to breach your employment contract.
If you work for more than one employer, you can be furloughed for each job. Each job is separate, and the cap applies to each employer individually. You can also be furloughed from one job but continue working in the other and receive your normal wages.
Do you have to work full-time to be furloughed?
No. All workers full-time, part-time, agency, flexible, apprentices, or even those on zero-hours contracts can be furloughed and be eligible for the scheme. So long as the employee was working for the company on their PAYE payroll before March 19, 2020.
Even those who were made redundant by an employer since March 19, 2020, are eligible for the scheme as long as the company rehires them.
Is there a limit on how many staff can be furloughed and for how long can they remain furloughed?
There is currently no limit on how many staff members a business can furlough. Employees can remain furloughed for the full duration of the Coronavirus Job Retention Scheme, which is in place for three months, from March 1 to June 2020. However, these dates may be extended if needed.
Any employees placed on furlough must be furloughed for a minimum period of 3 consecutive weeks. Employees can also be furloughed multiple times so long as each separate instance is for a minimum of three weeks, and once they return to work they are taken off furlough.
How will I receive the money?
Once you have made your claim, HMRC will check if you’re eligible and if you are, they will pay the money to you by BACS to your UK bank account. Furloughed employees must receive no less than 80% of their wages, up to a monthly cap of £2,500. If you choose to, you can top up your employees’ wages to 100%, but you cannot claim for this extra money, and you do not have to do this.