Article prepared by BGM:
HMRC are still working on setting up the mechanism for employers to operate this scheme and claim this reimbursement.
But further details have been published on the way the scheme will be operated and we have updated our note to include this additional information.
This scheme will provide a grant to all UK employers who operate a PAYE scheme as support to continue paying part of the salary for those employees that would otherwise have been laid off during this crisis.
It will apply for employees as at 1 March 2020 who are asked to stop working but will be kept on the payroll.
Furloughed employees must not work for the employer during the period they are furloughed.
HMRC will set up a new online portal through which employers will provide details to make a claim to include:
– A list of affected employees, to be classified as “furloughed” workers,
– Details and earnings of those employees
– HMRC will set out further details on the information required.
An employer will only be able to make a claim once the staff to be furloughed have been agreed on and they have stopped working for the employer.
The grant will be paid directly to the employer. The Government hopes to make the first payments before the end of April.
This grant will initially run for 3 months to be back dated to 1 March 2020, but may be extended.
Further clarification has been published on the amount of the grant that HMRC will pay to employers.
The maximum grant will be calculated as the lower of:
– 80% of an employee’s “usual monthly wage cost” and
– £2,500 per month
Plus the associated employers’ national insurance contributions (NIC) on this amount and the minimum automatic enrolment employer pension contributions on that wage.
Fees, commission and bonuses should not be included.
An employee must remain on furlough for a minimum period of three weeks, although we understand that a further period may immediately follow the previous furlough if agreed. This will depend on their employment contract.
The scheme also covers employees who were made redundant after 28 February 2020, if they are rehired by their employer.
Furloughed employees can be on any type of contract, including full time or part time, employees on agency contracts and employees on flexible or zero-hour contracts.
The employer can choose whether to make up the balance of the salary but does not have to. This is a matter of employment law and subject to any agreed amendment to employment contracts.
The employer will pay the employee, the amount agreed under the employment contract, through the payroll using the RTI system as usual.
Furlough leave will be a change of status for employees and employers will need to notify the employees of this change and discuss it with them.
The furlough leave will be subject to existing employment law and the employment contract, the terms of which may affect the implementation of furlough leave.
We recommend that employers seek legal advice in respect of this change.
Here is a link to the most recent Government guidance on the scheme.
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Written by BGM