HMRC have been contacting Employers directly by email if they hold an email address for the business. Yesterday they released further details on how the claim system for furloughed workers will be claimed. They also changed the date when the member of staff had to be employed by the company to 19 March 2020 (previously 28 February 2020).
If we operate your payroll and you have advised us that you have furloughed employees we are likely to be able to make a claim on your behalf as agent. If you operate your own payroll you must start getting prepared to make the claim now. We are advised that claims will be paid within 6 working days of the information being submitted on the new portal which opens on 20 April 2020.
HMRC have said you will need the following information to make a claim:
- a Government Gateway (GG) ID and password – if you don’t already have a GG account, you can apply for one online, or by going to GOV.UK and searching for ‘HMRC services: sign in or register’
- be enrolled for PAYE online – if you aren’t registered yet, you can do so now, or by going to GOV.UK and searching for ‘PAYE Online for employers’
- the following information for each furloughed employee you will be claiming for:
- National Insurance number.
- Claim period and claim amount.
- PAYE/employee number (optional).
- if you have fewer than 100 furloughed staff – you will need to input information directly into the system for each employee
- if you have 100 or more furloughed staff – you will need to upload a file with information for each employee; we will accept the following file types: .xls .xlsx .csv .ods.
If we operate your payroll for you we will already hold the required information, but we may contact you to confirm the bank details where you wish the funds to be paid. If you are at all unsure who is asking for the bank details we suggest you call the main office number and leave your details with reception.
It is essential that you retain all records and calculations in respect of your claims.
We have attached a list of frequently asked questions as supplied by our free protection providers Croner-I which we thought you might find useful.
What is the Job Retention Scheme?
By designating employees as “furloughed”, you will be able to recover 80% of your wage costs through the Job Retention Scheme. This means that your furloughed employees will still receive at least 80% of their wages, even though they are not carrying out any work. It is a way of avoiding unpaid lay off or redundancy and allows you to keep employees on until you can provide work again.
Do I need to get employees to agree to the furlough?
Unless there is a term allowing furlough in employees’ contracts, you will need to obtain agreement from employees to designate them as furloughed and reduce their pay (if that is what you want to do — you may decide to furlough and keep on 100% pay by topping up the Government grant).
You will need to agree the pay reduction with employees as part of the agreement to furlough, because normal employment law principles apply.
The agreement should be confirmed in writing to the employee and a record kept for five years.
Do I have to collectively consult if 20 or more employees are involved?
Possibly. If there is a pre-existing consultation process in place, you may have to follow it. If there is no consultation process in place and to begin consultation on this would present difficulties with the election of representatives and actually fulfilling consultation, there may be a defence because of the special circumstances. In all but the most extreme cases, there is likely to be an expectation that some form of consultation is undertaken.
Who will the Scheme apply to?
The Scheme is open to all UK employers that had a PAYE scheme in place on 19 March 2020, is enrolled for PAYE online and has a UK bank account. Any organisation with employees can apply, including charities, not for profit organisations and recruitment agencies.
Whose wages can I claim?
To be eligible, the individual must be PAYE and must have been on the payroll on 19 March 2020. This means that you cannot recover wages for anyone who started on 20 March or later. Full time, part time, temporary and zero hours and fixed term staff can all be included as long as they are PAYE. Office holders, (including directors), salaried members of LLPs, agency workers and those who fall into the employment status category of ‘worker’ can be included.
What do we use as the starting point for employee pay?
Salaried employees’ pay is that which they earned in the last pay period prior to 19 March 2020. You can reclaim up to 80% of wage costs up to a cap of £2500 per month, plus the associated employer National Insurance contributions and minimum auto-enrolment pension contributions on that reduced wage. Guidance published on 15 April 2020 clarifies that, if, based on previous guidance, you had calculated your claim based on the employee’s salary as at 28 February 2020 (and that differed from their salary in their last pay period prior to 19 March 2020), you can choose to still use this calculation for your first claim.
The situation for those with variable/irregular pay is different. If the employee has been employed (or engaged by an employment business) for a full 12 months prior to the claim, you can claim for the higher of either:
- the same month’s earning from the previous year
- average monthly earnings from the 2019–20 tax year.
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
What is covered in terms of elements of pay?
The Government guidance is that commission, bonuses and discretionary payments are not included when calculating pay. All elements that you are obliged to pay your employees including wages, past overtime, fees and compulsory commission payments can be included.
Will the payment be taxable?
Yes, payments you make to furloughed employees will be subject to PAYE and National Insurance contributions.
Will I be able to recover Employer’s NI contributions and pension contributions under the Job Retention Scheme?
You remain liable for Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees. However, you can claim a grant from HMRC to cover:
- wages for a furloughed employee (equal to the lower of 80% of an employee’s regular salary or £2500 per month), plus
- the Employer National Insurance contributions associated with that (capped) payment, plus
- minimum automatic enrolment employer pension contributions in respect of that (capped) payment.
HMRC will issue more guidance on how you should calculate their claims for Employer National Insurance contributions and minimum automatic enrolment employer pension contributions before the scheme becomes live.
Do I have to pay 100% of the wages in order to claim?
No. You can choose to top up to 100% but do not have to. Those who choose to top up can still only claim the 80%.
Do I have to meet minimum wage with the 80%?
Minimum wage applies to hours worked. So, if employees are furloughed and do not work and 80% of their normal earnings would take them below the NMW, this is fine.
How will I apply for the reimbursement?
You can make one claim at least every three weeks. The Government will issue further guidance on the mechanics of claiming the payment, and the online portal to use, in due course.
What if I have already made redundancies?
Anyone on the payroll on 28 February 2020 who was made redundant before 19 March 2020 can be re-hired and put on the scheme. There is no obligation to re-hire, just that you can agree to this. Employers can use the letter to withdraw a redundancy and offer furlough .
Can I agree to re-hire and furlough in any other circumstances?
Yes. Anyone who left your organisation after 28 February 2020 but before 19 March 2020 can be re-hired and placed on furlough. However, this is not an obligation and you can decide whether to do this or not. Anti-discrimination laws are likely to apply here.
How long does furlough last?
Furlough must be taken in minimum blocks of three weeks in order to be eligible for the funding. For now, the maximum period would appear to be three months because that is how long the Government has said the Scheme will be available for. However, it may be extended.
Can I rotate employees on furlough?
Yes, it appears so. Employees can be put on furlough more than once so you can, for example, place Employee Set A on furlough while Employee Set B continue to work. Then Set B can be put on furlough while Set A come back to work. Set A can then be furloughed again, etc.
Can the employee undertake any work during furlough?
No. The employee must not be working for you at all, or for any linked or associated organisation. . If they work for even an hour (during their minimum three week furlough period) you cannot claim the grant for this period.
Are all types of work-related activity banned during furlough?
Employees are able to undertake training and do volunteer work, as long as they do not provide services to or make any money for you or any linked or associated organisations. If training is done, it is likely that this will need to be online because of the social distancing measures in place. Furloughed employees undertaking training should be paid for the time because this will be work, albeit the kind permitted during furlough.
Can my employee get another job while on furlough with me?
Your normal rules on employees getting second jobs will still apply; however, you may wish to be flexible in the circumstances. It will be in your best interests to continue any restrictions on other employment which may create a conflict of interest, eg work with a competitor or client. If you do allow your employees to take on other work during their normal working hours, you should ensure that they understand that they must be available for duty when work is available again.
How do I select employees for furlough leave?
You must be careful not to discriminate when deciding who to furlough. In some cases it will be all employees, in others it will be certain departments. Where selection does need to take place, it may be appropriate to implement a similar selection period as would be used in a redundancy situation so that the most effective employees remain in work.
What about employees on sickness or self-isolating?
Employees on sick pay or self-isolating cannot be furloughed but can be furloughed afterwards. You cannot claim the grant for employees who are getting statutory sick pay.
Government guidance released on 9 April 2020 clarified that whilst an employee receiving SSP cannot be furloughed, an employer can decide whether to place a sick employee on furlough or on sick leave. This includes those who are already on sick leave, including long-term sick leave. Where the employer places a sick employee on furlough, SSP is longer payable and the employee should receive furlough pay. Both the SSP recovery scheme, introduced as part of coronavirus emergency legislation, and the Job Retention Scheme can be used for the same employee but not at the same time. The guidance made clear that an employer should not use the Scheme as a way to “top up” sick pay for short term sickness. In any case, the minimum furlough period eligible to claim the grant is three weeks. Where an employee falls sick while on furlough, the employer can decide whether they will be on sick leave or remain on furlough. Employers should bear in mind that a furlough period of less than three weeks does not qualify for a claim to the Scheme. Employers who decide to place sick employees on SSP cannot claim for wages under the Scheme.
What about employees who are ‘shielding’?
Previous Government guidance stated that employers can furlough individuals who are shielding if they are unable to work from home and they would otherwise have to be made redundant.
However, updated guidance from 9 April 2020 now simply states that those who are shielding can be placed on furlough when they are unable to work. The “redundancy” criterion has now been removed which widens the circumstances in which a shielding employee can be furloughed. Despite this, the guidance still says that the Scheme is for use by organisations who are severely affected by coronavirus, though it acknowledges that different organisations will face different impacts.
What’s the position with apprentices?
Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed. However, apprentices must get at least the appropriate minimum wage rate for all the time they spend training which is not covered by the 80% reimbursement.
Where apprentices are furloughed or placed on unpaid leave, or where the nature of their employment changes and no longer supports their apprenticeship, the apprentice, employer and training provider should consider whether a break in learning would be appropriate.
Apprentices can be made redundant, however, specific advice should be taken on this as different rules may apply in different parts of the UK.
Employers who are subject to the apprenticeship levy payment must continue to pay this as normal; it is not recoverable under the scheme.
What’s the position with those with caring responsibilities?
Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed.
Can I furlough employees working on a visa?
Foreign nationals are eligible to be furloughed, including employees on all categories of visa.
Does annual leave accrue during furlough?
Statutory minimum annual leave entitlement will continue to accrue because the contract of employment is still in existence. You may want to agree that contractual leave in excess of the statutory minimum does not accrue; however, this may present a blocker to obtaining employees’ agreement.
Can annual leave be taken at the same time as furlough?
The Government guidance is not clear on this but the developing position is that it is possible to take annual leave while on furlough. Latest guidance from Acas indicates that employers may still require employees to take leave on Bank Holidays. The Working Time Regulations 1998 do not recognise Bank Holidays as a separate entitlement and so it appears that there is no reason to consider leave on Bank Holidays as any different to non-Bank Holiday leave. It also appears, then, that annual leave does not break a period of furlough and a three-week furlough period which contained a week of annual leave still qualifies the employer to make a claim under the Scheme for the 80% wages. The question of pay for annual leave during furlough is less clear. Workers must receive normal remuneration when on annual leave. Although it may be arguable that normal remuneration during furlough is 80% (where such has been agreed between employer and employee), it is not permissible to contract a worker out of their WTR rights. The safe option would appear to be payment of 100% wage as a top up to that recoverable under the Scheme. However, some employers may choose to pay only the 80% recoverable and hold the remainder aside until further clarification becomes available.
Can I require my employees to take annual leave during furlough?
For the reasons set out above in “Can annual leave be taken at the same time as furlough?”, it appears that annual leave does not break a period of furlough. It follows then that normal application of the WTR still applies, including requiring employees to take annual leave during furlough. However, despite the lack of Government guidance on this, it may seem contrary to the general purpose of the WTR which provides paid time off when the worker would otherwise have been working. Enabling an employer to require an employee to take annual leave during furlough would allow them to run down an employee’s entitlement potentially leaving them with no remaining leave to take when operations return to normal. This does not seem to fit squarely with the principle of the WTR, especially if an employer were to pay only 80% of wages during leave. For these reasons, employers may choose not to require furloughed employees to take annual leave until further clarification is received.
It should be mentioned that the Working Time Regulations 1998 have recently been amended to allow for four weeks of leave to be carried over into the next two leave years where leave could not be taken due to coronavirus. This now means that all statutory minimum annual leave can be carried over, albeit carrying over the 1.6 weeks of additional leave is still subject to agreement by the employer and can only be carried over into the next leave year. Carry over of any contractual leave in excess of the statutory minimum is subject to agreement between employer and employee.
This extension to the carry over rules means that it is less of a concern for employers that employees have a potentially large amount of backed leave to take once the pandemic passes.
What steps have been taken to prevent abuse of the Scheme?
Chancellor Rishi Sunak stated in his Government briefing on 8 April 2020, that the Scheme had been put together in a way to prevent spurious claims. HMRC’s Chief Executive, Jim Harra, confirmed measures had been put in place to minimise fraud, which were:
- the requirement for an employer to have already been authenticated by HMRC
- a four- to six-day payment processing period to allow background checks
- checks on employers after a payout has been made to verify a claim was real.
A hotline has also been set up on which employees can report employers’ abuse of the system.