What does it mean for your organisation?
To support businesses impacted by the economic lockdown that has been enforced to suppress the COVID-19 outbreak, the Government has introduced the Coronavirus Job Retention Scheme.
If you are unsure about the scheme, how it works and how it will benefit your organisation, then click on the boxes below to find answers to some of the most asked questions:
The Coronavirus Job Retention Scheme is a temporary initiative designed to support your organisation if it cannot maintain its current workforce due to a temporary reduction in revenue caused by the lockdown. It allows you to furlough your employees and the Government will subsidise their wage on your behalf.
You can find more information about the scheme below:
-
- What does the scheme cover?
-
Under the scheme, HMRC will cover:
- 80% of the furloughed employee’s usual monthly wage, with a cap of £2,500 per month
- Employer National Insurance contributions
- Pension contributions (to the level of the minimum automatic enrolment employer pension contributions) on the subsidised furlough pay
You can furlough some or all of your eligible employees.
-
- When does it start?
HMRC’s application portal was launched on 20th April 2020, which means you can start claiming now for employees furloughed on or after the 1st March 2020. The scheme is currently expected to run to the 30th June 2020. This may be extended depending on the duration of the present economic lockdown.
-
- Who can apply?
To be eligible for the scheme, your organisation must have:
- Created and operated a PAYE scheme on or before 19th March 2020
- Enrolled for PAYE online
- A UK bank account
Any organisation with a UK payroll can apply. This includes:
- Businesses of all sectors
- Charities
- Recruitment agencies
- Public authorities
-
- Who on my team can be furloughed?
Employees on any type of employment contract can be furloughed, including full-time, part-time, agency, flexible or zero-hour contracts. In addition, foreign nationals are also eligible – grants under the scheme are not counted as ‘access to public funds’, meaning you can furlough employees on all categories of visa.
However, organisations can only claim for furloughed workers that were on your PAYE payroll on or before 19 March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19th March 2020.
While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
What about my team members laid off prior to the scheme?
Employees that were employed and on payroll as of 28th February 2020 but were made redundant after that and prior to the 19th March 2020, can also qualify for the scheme if you re-employ them and put them on furlough.
However, any grant for redundant workers who have been re-employed will only cover the period from the date they were furloughed and not to the date they were made redundant.
If a worker has had multiple employers over the past year, has only worked for one of them at any one time, and is now being furloughed by their current employer, their former employer cannot re-employ them, put them on furlough and claim for their wages through the scheme.
-
- What about apprentices?
Apprentices can also be furloughed, and they can continue to train during furlough.
However, you must ensure your apprentices are paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage as appropriate for all the time they spend training. You must cover the shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.
See the Government guidance for apprentices here
To find out more about how IRIS’ solutions can help you in accessing the Job Retention Scheme, visit our COVID-19 product support page.
Visit the COVID-19 product support pageWhen participating in the Job Retention Scheme, your organisation has to ensure it complies with certain requirements set out by the Government, particularly when it comes to the support you provide your workers being furloughed.
Here are the key issues to be considered:
-
- What are my obligations to my team?
Under the Job Retention Scheme, the employer must pay the furloughed worker either 80% of their reference pay, or £2,500 – whichever is lower. You are able – but not obliged – to top this up.
Employees must be on furlough for at least three weeks at a time in order for you to participate in the scheme.
While participating in the scheme, you remain subject to existing employment laws.
-
- Can they still work while they are on furlough?
Employees cannot continue working while they are furloughed. This means the scheme cannot be used to support employees working reduced hours.
-
- Can training can go on?
Yes, employees can continue to receive training while they are on furlough. The Government is strongly encouraging organisations to maintain or ramp up training schemes to support employees in acquiring new skills and expertise while they are not on duty. This will strengthen businesses’ positions when the lockdown ends to help them return to operational normality as quickly as possible.
You can find out more about the training allowed under the scheme in IRIS’ blog here.
Read more
-
- How do we work out how much we can claim for each furloughed worker?
The grant for each worker is based on their reference pay.
For fixed rate workers, the reference pay for the grant is based on their actual salary, before tax, as it was on the 19th March 2020.
For workers who aren’t fixed rate, the reference pay is the higher of either:
- Average monthly pay for the 2019/2020 tax year
- The pay from the same month last year
The reference pay is not just the worker’s basic pay, but may also include:
- Overtime
- Fees and compulsory commission
- Bonuses and tips, and other discretionary payments
When making a claim, you need to make sure you correctly classify your fixed-rate and variable-rate employees in your application.
-
- What about annual leave?
Employees continue to earn annual leave while on furlough, and can take holidays while furloughed. With this in mind, you should continue to take this into account on your payroll, so there is no confusion when they return to work.
To find out more about how IRIS’ solutions can help you in accessing the Job Retention Scheme, visit our COVID-19 product support page.
Visit the COVID-19 product support pageBefore filling out the application form for the Coronavirus Job Retention Scheme, there are some key steps you need to take to ensure you meet your obligations both under the initiative and under employment law:
-
- What do I need to do first?
To apply to the Job Retention Scheme for furlough grants, an employer must have the written agreement of the employees being furloughed.
In reaching this agreement, the normal principles of employment law stand, including anti-discrimination and consultation legislation. Even when furloughed, workers retain their existing employment rights and continuity of employment.
The required collective consultation of 30 to 45 days may be triggered depending on how many team members are being furloughed. However, given the potential for the crisis to constitute “special circumstances”, it may be the case that this consultation timescale does not apply and that agreement can be reached more quickly.
-
- What do I do next?
Once agreement has been reached with the workers being furloughed, you can claim for the Coronavirus Job Retention Scheme grant via a new HMRC online portal launched on 20th April.
Payments will be made within six days of your claim being made.
Visit the portal here
To find out more about how IRIS’ solutions can help you in accessing the Job Retention Scheme, visit our COVID-19 product support page.
Visit the COVID-19 product support pageThere are a few other issues to take into consideration when participating in the Coronavirus Job Retention Scheme. Here are some key things to think about, as well as recommendations about where to seek further advice and guidance:
-
- How will HMRC audit our claims under the scheme?
The Coronavirus Job Retention Scheme includes provisions allowing HMRC to audit your claims retrospectively. With this in mind, you should keep written records of your furlough agreements for at least five years.
Payments under the scheme may be withheld or repayable in full if your claim is based on inaccurate or dishonest information.
-
- Can I make more than one claim?
You can’t make more than one claim per claim period, and you can’t change your claim once submitted. With this in mind, you should make sure you have reached an agreement with all of the employees you need to furlough, and correctly calculated the sum you are claiming for prior to applying for the grant.
-
- What happens if I still can’t maintain my existing staff after the Job Retention Scheme ends?
During and after the furlough period if, for whatever reason, your employees cannot return to their normal duties, you may consider redundancy.
-
- Where do I go for more information?
The Government’s latest guidance provides in-depth information about the scheme, as well as its other initiatives to support businesses during the COVID-19 emergency.
Visit the Government guidelines
-
- How is IRIS helping?
-
IRIS is also here to help you in managing your organisation, HR and payroll during the current crisis.
We have resources for each of our HR and payroll solutions that outline how to process furlough payments. We are currently updating all of our products to help you report on the information required to reclaim the COVID-19 Job Retention Scheme grant.
You can access these on our COVID-19 product support page.
Visit our COVID-19 support pageFinally, you can stay up to date with the latest insight into the Government’s evolving business support in our COVID-19 Resources hub.
See how we can help you
