Coronavirus (COVID-19) has significantly impacted businesses in the UK, with whole industries - such as hospitality and travel - almost grounding to a halt, leaving many employers facing tough decisions when it comes to staff retention.
In light of this, and in a bid to support those impacted by the virus, the government announced the introduction of temporary new measures. These measures come as welcome news to employers, as they aim to provide financial assistance to help businesses retain their workforce through the coronavirus crisis and safeguard workers from being made redundant.
Here we look at what we already know about the Coronavirus Job Retention Scheme – who it applies to, how long will it last and other questions which are crucial to your understanding of what it means for you and your employees.
At Macnabs, we are here to help you through this time. You can contact us on 01738 623432 or by completing the online enquiry form, and one of our specialists will get back to you as soon as possible.
Furlough describes a new type of leave which keeps employees on the payroll without them working. As staff are kept on the payroll while they are furloughed, it makes it different from layoffs or redundancies.
The Coronavirus Job Retention Scheme offers employers government grants to cover 80 per cent of wage costs for their staff, up to a maximum of £2,500 per employee per month. As an employer, it is at your own discretion, whether you can or decide to top up the remaining 20 per cent of your employees' wages.
The scheme is open to all UK employers with a PAYE system that was created or started on or before 28 February 2020. You must also have a UK bank account and enrolled for PAYE online.
Yes, you cannot furlough employees without their consent. They must be consulted and agree to this happening as it represents a change to the terms and conditions of their employment and therefore regulated by existing employment law. This agreement must be documented.
You can apply for the scheme online, which is now live and operational, as of 20th April.
Employers with less than 100 furloughed staff will need to supply the details of each employee they are claiming for. This includes their name, their NI number, the period of the claim and claim amount and their payroll/employee number.
For employers with more than 100 furloughed employees, they will be expected to provide the same information as above in an uploaded file, rather than inputting this directly into the system.
HMRC cannot provide individual employees with details of claims made by their employer on their behalf. Employees are encouraged to speak to their employer directly, instead of contacting HMRC.
Employees that agree to be furloughed are those working for you, who would otherwise have to be made redundant or dismissed. They can be full time, part-time, or on a flexible, agency or zero-hour contract. It should be obvious to you which staff you choose to furlough as you will have no work for them during this time. If you have work for an employee, then they cannot be furloughed.
You can only claim for furloughed employees who were on your PAYE payroll on or before 19 March 2020. Any employees hired after this date cannot be furloughed under this scheme.
Yes, Apprentices can be furloughed in the same way as your other employees as they can still carry on training while being furloughed.
NOTE – you must ensure you are paying your Apprentices at least the Apprentice National Minimum or National Minimum/Living Wage for the duration of their training. Therefore, you will need to account for any shortfall between what you can claim through the scheme and the proper minimum wage.
The current duration for the Job Retention Scheme is four months, starting from 1 March 2020. You can use the scheme at any time during this period. However, this could be extended given the current climate. The minimum furlough period is three weeks, and you can furlough employees more than once, again, only with their consent.
There is no limit to the number of staff you can furlough.
Yes, employees can use their holidays during furlough. Likewise, employers can require furloughed employees to take holiday leave.
In the UK, employers can require their employees to take holidays, and dictate when these holidays should be taken. This is provided employees are given adequate notice. Adequate notice will usually be defined as twice as long as the amount of time you want your employee to take off. If the notice period is less, then employee consent will be required, and you must get this in writing.
With furlough scheme set to run until the end of June, this means there will be several bank holidays in the UK during this period. Based on the latest guidance, if an employee usually works bank holidays, employers can agree to have this included in the grant payment. If your employees usually take bank holidays as leave, then you will either have to top up to their usual holiday pay or give them a day of holiday in lieu.
Yes, you will need to pay your employees full pay if they take holidays during a furlough period.
Before making any decisions, it might be best to wait for further guidance on holidays during a furloughed period. You could remind your employees that you reserve the right to require them to take holidays even while they are on furlough, however as best practice, not require them to actually take any holidays for at least the first three weeks.
There are some other alternatives for businesses at this time who cannot wait for the grants to become available under this scheme. The government has announced coronavirus grants and loans for businesses to maintain cash flow. Alternatively, you might have to look at other options.
Find out more about your options for retaining your staff, without making redundancies, in our article here.
No, staff cannot continue to work for you while they are on furlough. The scheme also does not cover the wages of any employees working reduced hours as a result of the coronavirus.
Mr Harra, Chief Executive of HMRC said:
“Employees must be completely furloughed by their employer, that means that they should not engage in any work for that employer whilst they are on furlough”
However, staff will be allowed undertake training, provided it doesn’t involve any remunerative activity.
If it does not breach the terms of their employment and any contractual obligations, your employees can work elsewhere.
This guide does not constitute legal advice and is provided for general information purposes only. If you require specific legal advice you should contact one of our lawyers who can advise you based on your own circumstances.
Please note this information is accurate as of 01/05/20 and is subject to change as official guidance is adapted to reflect the implications of the virus.