Please note that coronavirus guidance is a rapidly evolving area and this blog is correct as at 6 April 2020. Any later updates from the government or clarifications of laws or the HMRC scheme may change the advice provided in this blog. For the latest government guidance for businesses, employers should check the .GOV website.
Details on the government’s Coronavirus Job Retention Scheme were published originally on 26 March 2020. There have since been many questions and clarifications requested by businesses and employers. Over the weekend, the government updated its guidance and clarified various elements of the scheme. Below we provide a main summary of the most important updates about the scheme and furloughing staff.
Employers Must Confirm the Furlough in Writing
The updated guidance clarifies that employers must confirm the furlough in writing. This is an antifraud measure. A record of this should also be kept on the employees file for five years. The HMRC will be carrying out retrospective investigations so employers should ensure they make and keep these records.
Employees Can Be Furloughed More Than Once
The updated guidance confirms that employees can be furloughed multiple times, subject to each period of furlough lasting at least three weeks. This means that employers can place staff on and off furlough leave for the duration of the scheme.
Clarification On What’s Included in the Earnings Employers Can Claim For
- The government has clarified that employers can reclaim 80% of the following elements of employee earnings:
- Wages
- Past overtime
- Fees (the last guidance says fees are excluded)
- Compulsory commission payments
Not included are:
- Discretionary bonus
- Tips
- Discretionary commission payments
- Benefits in kind (e.g. health insurance benefits, company car)
Clarification On Who is Eligible to Claim Under the Scheme
All employers are able to claim for any employees. It’s not limited to just those employees who otherwise would have been made redundant, though this is the main purpose of the scheme to protect employment. Its open to all, provided that:
- The employer had a PAYE scheme set up as of 28 February
- The employee was on PAYE as of 28 February
- The employer had enrolled for PAYE online – this is new within the guidance.
- Employers should do this as soon as possible if they haven’t already as it can take up to 10 days to complete
- The employee has a UK bank account
The updated guidance confirms that apprentices can also be furloughed.
Clearer Guidance for Public Sector Employers
The updated guidance confirms that ‘where employers receive funding for staff costs and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion and correspondingly not furlough them’. Therefore, if your company is receiving public funds, then you should not be furloughing staff under the scheme.
When the Scheme Will Be Live
The government expects the scheme to be up and ready by the end of April. Until such time as it is ready, employers will need to fund the furloughing themselves until they can claim under the HMRC portal that is currently being developed.
Clarification If the Employee Has More Than One Job/Employer
The updated guidance has clarified that under the scheme, each job is considered separately. The £2,500 cap in place, will apply to each job separately for an employee. Also new clarification means that an employee that has been furloughed can go and at the same time go and work for another employer.
Clearer Information for Umbrella Companies and Company Directors
If you are employed by your own umbrella company, your umbrella company (which will pay you a salary) can furlough you and claim back 80% of your salary.
The guidance also makes it clear that company directors can be furloughed but they must not be doing any work for the company. The only exception to this is if they are complying with their statutory duties (such as filing Companies House documents).
Clarification on Volunteer Work and Training
We know that furloughed employees can take part in volunteer work as long as it doesn’t provide services to, or generate revenue for, the employer. Additional clarification says that the employer can agree to find furloughed employees volunteer work opportunities. So, the company can support their staff in finding training or volunteer work.
The latest details on the updated scheme can be found on the .GOV website.