1st April 2020
Coronavirus Job Retention Scheme FAQ
Filed Under: Coronavirus / COVID-19 updates
- When can employers expect to receive the reimbursement from HMRC?
The government have not given a specific date or timeline of when employers will receive the repayment once a claim has been made as of yet. We are awaiting further details to clarify this. One thing we do know is not to expect the payment till at least May 2020.
- Will the payment to furloughed employees be taxable?
Yes, payments you make to furloughed employees will be subject to PAYE and National Insurance contributions.
- How do we put someone in the furlough scheme?
You need the employee to agree to be put on furlough and then you will need to designate them as furloughed. The guidance says that, to be eligible for the grant, employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
- Does someone need to have been on the payroll on 28 February 2020 to be put on furlough?
Yes, you cannot use the scheme to furlough all new joiners. Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme. Note that the key date is 28 February, even though 2020 is a leap year and there was a 29 February this year.
- Can we only put people in the furlough scheme if redundancy was the alternative?
The government previously indicated that the furlough scheme was an alternative to redundancy, lay-off or unemployment. The guidance for employees refers to furlough as applying when the employer is unable to operate or has no work for the employee to do, but there is no explicit requirement in the latest guidance for employers to show that redundancy was the alternative.
Importantly, note that the government has indicated that it will retain the right to retrospectively audit employers, with scope to claw back fraudulent or erroneous claims. Ultimately, it seems that employers may be allowed some discretion, but they should not be abusing the scheme.
- Can we rotate employees on furlough?
Possibly yes. Some employers have work for some staff, but not enough work for all. The employer guidance is unclear on this point, but the employee guidance seems to answer the question, by saying that employees can be placed on furlough more than once.
This suggests that employers can rotate employees on furlough, so long as each employee spends a minimum of three weeks on furlough.
- Can employees do the odd bit of work for us while furloughed?
Definitely not. Employees cannot undertake work for or on behalf of an employer that has furloughed them. The guidance says that this includes “providing services or generating revenue”. If they do any work for you then you may have to repay the grant.
Directors and owner-managers can be furloughed if on PAYE and will still be allowed to do statutory duties in these roles – this will not count as work.
- Can we ask employees to do training while furloughed?
Yes. A furloughed employee can do training if this does not involve providing services or generating revenue. The guidance points out that if workers are required to, for example, complete online training courses while they are furloughed, they must be paid at least the National Living Wage/National Minimum Wage for the time spent training, even if this is more than the subsidy.
- Can furloughed employees do volunteer work?
Yes, this is allowed according to the guidance.
- Do employees have to agree to being furloughed?
Yes generally they do, but this does not necessarily need to entail a protracted procedure.
- Can employees put themselves on furlough?
No. You, as the employer, need to designate them as furloughed.
- When can we start claiming?
The subsidy applies from when an employee is placed on furlough. The scope for backdating is unclear. The backdating to 1 March 2020 seems to be designed to cover those who have already been laid off or made redundant as a result of coronavirus, so if employers re-employ people who were made redundant after 1 March they can furlough those employees and claim the grant.
- What if we’ve already made redundancies?
If you have made employees redundant since 28 February, it is possible to give those former employees the option of being rehired and then put straight on the scheme.
- How should we select which employees should be furloughed?
Workers who cannot work from home and who currently have no work to do will be obvious candidates for furloughing.
- Can we do a partial furlough to put somebody on reduced hours?
No. An individual cannot work for you at all if they are furloughed.
- What is the process for claiming the payment?
You will need to submit information to HMRC about workers who have been furloughed and their earnings, via a new HMRC online portal, which will hopefully be open by the end of April. If you need short-term cash flow support in the meantime, the government has said you may be eligible for a Coronavirus Business Interruption Loan.
- What about casual workers and workers on zero-hours contracts?
The scheme will cover workers on the PAYE system, including any casual or zero-hours worker who are paid in that way. For workers whose pay varies, you can claim for the higher of either:
- The same month’s earning from the previous year
- Average monthly earnings from the 2019-20 year
If the worker has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. If the worker only started in February 2020, you should use a pro-rata approach.
- Can workers be in the furlough scheme if they are off sick?
The guidance says that “employees on sick leave or self-isolating should get Statutory Sick Pay but can be furloughed after this”.
- Will workers continue to accrue holiday allowance while they are furloughed?
Yes, because they remain employed. You could agree that no contractual holiday (beyond the statutory minimum of 5.6 weeks per year) will accrue during furlough, but employees will retain their right to accrue annual leave under the Working Time Regulations.
- Can people take their holiday allowance while furloughed?
This is not entirely clear. You could refuse requests for holiday during furlough if you want to do so, but you might prefer employees to use up their holiday allowance rather than storing it up.
- What should we pay staff who take holiday during furlough?
It is expected that you will be able to claim for holiday pay through the grant, in the same way as wages or salary, although the guidance is not as clear as it should be on this point.
- What happens at the end of the furlough?
The idea is that employees will be able to come back to work. The scheme is designed so that employers don’t need to make redundancies and then recruit a new workforce once the crisis is over – their existing workforce will be ready and waiting in the wings to resume work.
However, if trading conditions have not improved sufficiently for you to take all the furloughed employees back when the scheme ends then you will be able to make them redundant, subject to the usual rules on redundancy.
- Are self-employed individuals eligible for the furlough scheme?
No, the government has announced a separate package of support for self-employed individuals affected by Coronavirus.
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