Important information for Employers and Employees
The Government has now announced that the Coronavirus Job Retention Scheme is to be extended until 30th June 2020 after having originally scheduled to end on 31st May 2020.
Of course, this does not oblige an employer to keep employees on furlough leave up to the end of June 2020 nor indeed until the original date of 31st May 2020.
Employers are reminded that they should have signed written agreements with employees wo have been placed on furlough leave.
For further information on the above and your employment law matters –please contact us on 0330 323 0435 or email@example.com
COVID-19 JOB RETENTION SCHEME
Her Majesty’s Revenue & Customs (HMRC) have announced that its online portal will open on Monday 20th April 2020
for employers to start making its first claims for their furloughed employees withthe first payments being paid out by 30th
April 2020. Brief additional details are as follows:
HMRC aim to pay out claims within one week of them being submitted;
Guidance to be published next week on how to use the portal;
Employers can only make one claim per pay period for their furloughed employees;
Guidance to be published next week on how to use the portal;
Claims can be made up to 14 days in advance.
Update: Coronavirus Job Retention Scheme & Furlough Leave
Over the weekend, the government has updated its guidance on the rules of the Coronavirus Job Retention Scheme regarding furlough leave.
Some of the issues on which people were seeking specific answers have now been addressed but by no means all. Here are the main aspects, which have been clarified:
employees are allowed to start a new job when on furlough providing that the current contract with the furloughing employer permits it. To be clear, an employee can therefore receive the 80% of his “furloughed” salary and 100% of the new job income;
commission earnings can be reclaimed and included in the 80% if it is contractual commission when calculating the furlough salary;
Company directors can be furloughed and this would seem to include NEDs that are paid through the employer’s PAYE scheme. This is different to the initial interpretation;
Employees can be furloughed during separate and broken periods subject to each period being at least three weeks.
FURTHER DETAILS & CLARIFICATION
Coronavirus Job Retention Scheme & Furlough Leave
The government has published further details of the Coronavirus Job Retention Scheme (otherwise known as the Furlough Scheme). Here are some of the key points, some of which had not previously been announced:-
It expects the scheme will be up and runnning by the end of April 2020;
the scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020;
employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer NICs and minimum auto-enrolment pension contributions on that wage. Fees, commissions and bonuses are not included;
you can choose to top up to 100%, but does not have to (subject to employment law and renegotiating any contractual entitlements);
employees whose pay is variable, the employer can claim for the higher of (i) the same month’s earning from the previous year (eg earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year;
individuals are only entitled to the minimum wage for the hours they work. So if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working ie: below NMW. However, they are entitled to be paid NMW for any time spent training.
to be eligible, the employee must have been on the payroll on 28 February 2020. If they were hired later, they are not eligible. Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put on the scheme retrospectively;
furlough leave must be taken in minimum blocks of three weeks to be eligible for funding;
the employee must not be working at all. If they work for even an hour (presumably during their entire three week furlough period), they are not eligible. However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer;
The employer must be careful not to discriminate in deciding who to offer furlough too;
employees on sickpay or self-isolating cannot be furloughed, but can be furloughed afterwards. Employees who are shielding can be placed on furlough;
employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed;
employers can only claim once every three weeks, ie they cannot get weekly reimbursement.
Government’s Coronavirus Job Retention Scheme
On Friday 20th March 2020, the UK Government announced further major measures to assist employees and employers to cope with the immense issues caused by the Coronavirus pandemic.
The Coronavirus Job Retention Scheme effectively permits all employers of all sizes to place employees on “Furlough Leave” temporarily.
· Being designated as a Furlough Leave employee essentially has the effect of placing the employee on leave and the Government will pick up 80% of the employee’s salary up to a maximum of £2,500.00 per month (Gross).
· The employer may choose to make up the rest of the employee’s salary but are not obliged to do so.
· Employees remain “on the books” during any period of Furlough Leave.
· To be able to “fairly” designate employees as furloughed, employers need to adopt the usual employment law principles in terms of consultation and agreement. Employees cannot be forced to accept being placed on Furlough Leave against their will but employers are permitted to offer it to them as an alternative to redundancy.
· Employees cannot self-nominate themselves to go on Furlough Leave. The Employer must first offer it.
· any furloughed employee cannot do any kind of work during this period of leave as this will be determined as a fraudulent claim.
Details are somewhat sketchy at present and the Government are working on setting up a special online portal to process claims from the employers directly but it is not yet available. However, employers should start the process to consult the affected employees as soon as possible and written agreement should be obtained in the first instance.
We will provide further details/developments as they become available.
IR35 EXTENSION POSTPONED
Following our News Sheet back in February 2020 regarding the proposed ramp up of the IR35 coverage, the Government has now declared that the extension of IR35 to medium and large companies in the private sector is being postponed by a year, to 6 April 2021.
The IR35 tax rules are aimed at making sure that where a contractor who provides their services through an intermediary (often their own limited company) would be considered to be an employee if that intermediary were not used, that contractor is subject to broadly the same tax and National Insurance contributions as employees.