News & Insights

1. What is the Covid-19 Job Retention Scheme?

The Covid-19 Job Retention Scheme is a temporary scheme (for three months initially) introduced by the government providing UK employers, from the 1 March, to support employers that have been badly hit by coronavirus prevent mass unemployment. It will temporarily help pay most of the wages of people who can’t do their jobs and help companies retain them.

The scheme entitles employers to claim a grant from HMRC and therefore it is expected that it does not need to be paid back.

Employees who are not required to work, remain at home and be paid in accordance with the scheme are called ‘Furlough Workers’ or having been ‘Furloughed’.

2. Who is eligible for the scheme?

The scheme is open to all UK businesses with UK employees who have been on an employer’s PAYE payroll by 19 March 2020. They can be full-time, part-time, agency contractors or those on flexible or zero-hour contracts.

Employees who were made redundant after the 28 February but have been subsequently rehired before 19 March are also covered.

Employees who are unable to work because they are sick, have reduced hours or pay will not generally be eligible.

3. How much are employees entitled to under the scheme?

Employers can recover, subject to complying with the Scheme rules, 80% of the wage cost up to a maximum of £2,500 per month, plus associated employer NI contributions and minimum auto-enrolment employer contributions.

4. What is a ‘furloughed’ worker?

Furloughed employees are not working, but remain on the payroll.

You can undertake training or volunteer subject to public health guidance, as long as you’re not:

• making money for your employer or a company linked or associated to your employer
• providing services to your employer or a company linked or associated to your employer

5. How do employers go about you registering a furlough worker?

Firstly, employers must discuss furlough with employees. Selection of employees cannot be discriminatory and should be reasonable in consideration of the employers’ financial circumstances and the impact of the pandemic.

As the Scheme is a change to the terms of the employees’ contract, the employee must be notified in writing of their position as furloughed. The employer must record the notification and agreement of the employee in order to remain eligible for reimbursement and submit the furloughed employees’ information to HMRC via the specific online portal. That is due to be up and running on 20 April.

The portal and much-needed detailed guidance is yet to be published and is urgently needed to help employers and their advisors.

6. When will employers receive the grant?

The grant is a reimbursement to the employer therefore the employer will need to make payment to the furloughed worker, before then being reimbursed by HMRC.

HMRC are urgently working to set up the new reimbursement system, and the government intends the portal will be open for claims from 20 April, with an expected minimum processing time for the grants of at least four working days.

Employers will however be able to backdate an individual’s pay from when they were furloughed, up to 19 March 2020.

7. What happens if an employee becomes ill while furloughed?

If an employee becomes ill while furloughed they retain their statutory rights, including their right to Statutory Sick Pay. This means that furloughed employees who become ill must be paid at least Statutory Sick Pay.

If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary and they are required to pay SSP themselves, although may qualify for a rebate for up to 2 weeks of SSP.

8. Is my job guaranteed when furlough ends?

The purpose of the scheme is to allow businesses to retain staff they will need in the future when they are in a position to rebuild, rather than making them redundant, however businesses are under no obligation to keep on any employees when they stop receiving furlough.

The scheme will run until at least the end of May and the government has indicated it will be extended beyond that if necessary.

9. How long can an employee be on furlough leave?

Any furlough leave must be a minimum of three weeks but could be as long as the current three month period set down by the Government.

10. Can I take holiday during furlough leave?

One aspect of furlough leave that is causing worry and confusion relates to whether employees can take holiday during furlough leave, and if they can, what pay should they receive.

ACAS has published its own guidance confirming that employees can be furloughed and on holiday at the same time.

Added to the complication is the fact that the Government also announced that employees who are not able to take holiday, possibly due to the pandemic, can carry over some of their leave to the next two leave years.

This is still a contentious, complicated and uncertain issue within what was a much-welcomed initiative which we will provide an update on once more guidance has been provided.

If your business needs support implementing the furlough process, providing employees with notice or drafting of Furlough Agreements then please contact our team today and we will be happy to help.