We have now received details of the new furlough scheme from HMRC. The scheme remains a work in progress but the key points are:
- All UK employers that had a PAYE scheme in place on 28 February 2020 are eligible
- Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month and can choose to top up to the employee’s full salary but does not have to
- Employers can also claim the associated employer NICs and minimum pension contributions
- Fees, commissions and bouses are not recoverable under the scheme
- National minimum wage rules are suspended for those on furlough leave as they are not working
- For employees whose pay varies, the employer can
claim for the higher of:
- The same month’s earnings from the previous year; or
- Average monthly earnings in the 2019-20 tax year
- To be eligible, the employee must have been on the payroll on 28 February 2020. Anybody who was on the payroll on 28 February and has since been made redundant can be rehired. Anybody hired after 28 February 2020 is excluded from the scheme even if the offer was made before the scheme was announced
- Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding. There is nothing in this guidance which prohibits rotating furlough leave amongst employees (three weeks on/three weeks off) but this may be liable to change
- Employees must agree to go on furlough leave. The employer must be careful not to discriminate in deciding who to offer furlough leave to. Our view is that prioritising vulnerable workers is unlikely to be discrimination, as prioritising the over 70s (direct age discrimination against those under 70) is almost certainly justifiable, and those who do not suffer from serious health conditions are not protected under the Equality Act
- Employees on sick pay or self-isolating cannot be furloughed for the period of their sick leave or self-isolation. The guidance does not prevent them from being furloughed afterwards. Employees who are shielding (i.e. on 12 weeks’ leave) can be placed on furlough
- The scheme will be live before the end of April and all claims can be backdated to 1 March 2020.
The link for the government guidance can be found on the .GOV website.
This remains a fluid situation with further guidance and information promised in due course. To discuss this scheme and what it means for you and your business, please contact our Employment Team on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.