You may have heard about the Government’s new Job Retention Scheme in response to the Coronavirus outbreak, to help businesses manage their way through the Coronavirus. (Full information can be found on the Government website).
You may also have heard that, under the Scheme, all UK employers will able to access support to continue paying part of their employees’ salary: which should avoid making people redundant during this crisis. Staff that receive this support are known as furloughed. It means they’re still employed, but they don’t do any work or receive their full salary – rather 80% and up to a limit of £2,500 pcm.
<< WHAT YOU MAY NOT KNOW IS THAT YOU COULD ALSO FURLOUGH YOURSELF. READ ON! >>
What Does ‘Furlough’ Mean?
A furloughed member of staff is someone who is still employed, but they cannot do any work during this time. They’ll receive 80% of their full salary, up to a limit of £2,500 pcm. This is part of the government’s Job Retention Scheme and, as an employer, you can access support from the government to do this.
Who is Eligible?
All UK businesses can take part, and all PAYE staff can be furloughed. Unlike other changes to working arrangements, there are no time limits to furloughing.
We are currently investigating whether you need to pay Employer NIC and Employer Pension contributions if staff are furloughed and will keep you updated.
- Any staff on maternity leave will continue to receive maternity pay. They cannot be furloughed.
- Any staff on statutory sick pay can only be furloughed once they have recovered.
- Staff need to have been on PAYE prior to the Government announcement on 20th We understand it’s too late to add staff to PAYE now.
- Anyone joining a company after the announcement date will also be unable to be furloughed.
- You can furlough some staff now, and others later.
Can I Furlough Myself?
Yes, the business owner or manager can also be furloughed if they are paid through PAYE and plan to do no work during this crisis.
How do I Furlough Staff Members?
You can choose which staff you ask to become furloughed but you’ll need to get their permission by letter. We’ve prepared a template for you here.
You will need to:
- Designate affected employees as ‘furloughed workers,’ and tell them of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
- You will need to write to your staff and gain their agreement to be furloughed. Please use the letter we’ve drafted for you here.
- Submit information to HMRC about the employees that have been furloughed, and their earnings, through a new online portal (HMRC will set out further details on the information required – watch this space!).
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement.
An alternative, if you wish, is to ask staff to reduce their working hours, or pay.
Can I still work if I'm furloughed?
Yes, a furloughed employee can take another job. If you're an employer, you are still liable for tax and NI contributions, based on an employee's furloughed amount.
How long does furlough last?
According to the latest guidance, you have to be furloughed for a minimum of 3 weeks in order to make a claim.
<< HMRC ARE TO SET OUT FURTHER DETAILS - WATCH THIS SPACE! >>