Over the weekend, the government provided further guidance on the Coronavirus Job Retention Scheme and the key points are below. As guidance has been drip fed, employers should review their ‘notice of furlough letters’ and arrangements and notify employees of required clarification or new information, as well as any general business update for morale purposes. We can help you with that ‘review’ exercise and documents.
- To be eligible for the grant employers must write to their employees confirming that they have been furloughed. A record of this communication must be kept for five years.
- You can claim for furloughed employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant. Employees who are unable to work because they have caring responsibilities resulting from coronavirus can also be furloughed. For example, employees that need to look after children.
- The government reaffirmed that to be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed.
- You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded. Of course employees who are Furloughed can’t carry out overtime or earn commission. However, the guidance confirms that for employees whose pay varies you can claim the highest of either the same month’s earning from the previous year or the average monthly earnings for the 2019-2020 tax year.
- The government reaffirmed that if you made employees redundant, or they stopped working for you on or after 28 February 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme.
- Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. Employees can be furloughed multiple times. It would appear that having a ‘Furlough’ rota is therefore permissible as long as each period of Furloughed leave is for a period of 3 weeks.
- If permitted by you, your employees are permitted to work for another employer whilst you have placed them on furlough leave which means they could in theory receive 80% of their pay from you and 100% of their pay from a new or existing employer.
- The guidance says “employees still have the same rights at work” – unfortunately the government is still being silent on the treatment of annual leave!
- After you’ve claimed (the system is still not up and running!), HMRC will check your claim, and if you’re eligible, pay it to you by BACS to a UK bank account. You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted.
- Please note further guidance was also provided on the treatment of benefits, salary sacrifice schemes, training, fixed term contracts, apprentices and other individuals such as office holders, salaried LLP members (i.e. those designated as employees for tax purposes) and salaried company directors. Importantly, where a board decides to furlough a director, and the furloughed director needs to carry out particular duties to fulfil his/her statutory obligations, the furloughed director may do so provided he/she does no more than would reasonably be judged necessary for that purpose. Whilst not entirely clear, it would appear from the guidance to date this means that he/she should not do any work they would otherwise normally do to generate revenue for their company.
Please contact the team should further information be required on these subjects or indeed if we can help with any other matter.
For further information contact our Employment Team, or call 0191 232 8345.