Furlough scheme extended to include more employees
The government have released further guidance on the Coronavirus Job Retention scheme on 15th April, which has extended the cut-off date for when employees started new jobs.
The original cut-off date was 28th February 2020, however this has now been extended to 19th March 2020, the day before the scheme was announced by Chancellor Rishi Sunak. This now means that thousands of individuals who previously did not qualify for the scheme because of their start date, will now be eligible to be furloughed.
It is hoped that the scheme will be operational as early as the 20th April, for claims to be submitted and it is expected that these will take a few days to process, whilst the government undertakes the relevant checks before any payments are made.
A review has concluded that the time frame should be extended and now any employee that was on an Employer’s PAYE payroll on or before 19th March, will be eligible to be furloughed. HMRC must have been notified that the employee was on the payroll through RTI submissions on or before 19th March. This is important for employers to check, to ensure that individuals are eligible for the scheme, as employees could have started working before 19th March, however if the company’s pay run means that they have not yet been notified to HMRC through RTI submissions, they are unlikely to be eligible for the scheme.
The extension also applies to employees who left their previous employer. Employees that were employed as of 28th February 2020 and on payroll, who were either made redundant or left employment before the 19th March, can also now qualify for the scheme if their former employer is happy to re-employ them and place them on ‘furlough’. Employers can re-employ individuals after the 19th March and ‘furlough’ them.
An employer is eligible to claim through the scheme in respect of employees of a previous business transferred after 19th March, if either the TUPE or PAYE business succession rules apply.
Claims can begin when the employees finished work and started furlough, not when the decision was made or the employees were written to, to confirm the decision.
National Minimum wage
Those that have been furloughed and therefore receiving the lower of 80% of their normal wages or £2,500, can receive this amount even if this means, based on their normal contracted working hours, that it would bring them below the normal appropriate minimum wage. Nevertheless, time spent as training is classed as working time for the purpose of the working time calculations and therefore must be paid at the appropriate minimum wage rates, taking into account the increases that took effect from 1st April 2020, which we discussed in a previous update.
What you can claim for
As previously discussed, you can claim the lower of £2,500 or 80% of an employee’s wages. Updated guidance now states that for salaried employees, this can be as of their last pay period up to 19th March 2020.
For employees with more than 12 months’ service whose wages vary, you can claim the higher of:
- Same month’s earnings from the previous year
- Average monthly earnings from the 2019-20 tax year
If an employee has been employed for less than 12 months, then an 80% average of their monthly earnings to date can be taken.
Past Overtime, Fees, Commission, Bonuses and non-cash payments
You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.
Payroll Consolidation
Where a group of companies have multiple PAYE schemes and there has been a transfer of all the employees into a new consolidated scheme after 19th March 2020, the new scheme will be eligible to furlough these employees and claim the grant.
Employers are also entitled to furlough employees who are being shielded, are on long term sick or are unable to work due to caring responsibilities resulting from CVOID-19 outbreak. The latest government guidance has clarified employees who are shielding in line with Public Health guidance, or need to stay at home with someone else who is shielding, can be furloughed.
Employees on Sick
Employees who are on sick leave or self-isolating because of the Coronavirus will be eligible for Statutory Sick Pay from day one. The job retention scheme is not intended to cover short term absences and therefore employees should not be furloughed in this situation. However, if businesses want to furlough individuals for a business reason and they are currently off sick, as long as they are eligible to do so, employers can furlough these individuals.
The individual would no longer receive SSP and will instead be classed as a furloughed worker. The decision is for the employer as to whether they shield sick employees or those who are shielding. Employers are able to claim back through the job retention scheme and SSP for the same employee, however not for the same period, an employee is either sick or furloughed at any given time.
Employees becoming sick whilst on furlough
Employees who have been furloughed retain their statutory rights, including the right to Sick Pay. This means if a furloughed employee becomes sick they must be paid at least SSP. It is up to the employer to decide whether to keep these employees on furlough or to move them on to SSP. If an employee moves onto SSP and the absence is not related to the Coronavirus, then employers will be responsible for paying the SSP themselves and will not be able to claim this back. However, should they decide to keep the employee as furloughed, they will be able to continue to make a claim for the employee through the Job Retention Scheme.
What you will need to make a claim
You must ensure that you either seek agreement to changes employees’ contracts of employment or that you already have the contractual right to do so. It may be necessary to look at collective consultation if it involves the relevant number of staff.
To claim, you will need:
- your employer PAYE reference number
- the number of employees being furloughed
- National Insurance Numbers for the furloughed employees
- Names of the furloughed employees
- Payroll/employee number for the furloughed employees (optional)
- your Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- your bank account number and sort code
- your contact name
- your phone number
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim. You should keep records for up to 5 years.
If you have fewer than 100 furloughed staff you will be asked to enter details of each employee you are claiming for directly into the system – this will include their name, National Insurance number, claim period and claim amount, and payroll/employee number (optional).
If you have 100 or more furloughed staff you will be asked to upload a file with the information, rather than input it directly into the system. They will accept the following file types: .xls .xlsx .csv .ods. The file should include the following information for each furloughed employee:
- Name
- National Insurance number
- claim period and claim amount
- payroll/employee number