Many commercial activities are currently closed, due to “lockdown” rules intended to limit the spread of Coronavirus
This creates commercial challenges and the government has brought forward measures intended to limit the impact of lockdown on businesses and employees.
A key initiative is the Coronavirus Job Retention Scheme.
This allows workers to be placed on “furlough” (ie: stood down) for the duration of the emergency, with a proportion of their wages reclaimed from government.
This, it is hoped, will reduce cash-flow pressure, allowing businesses to “hibernate” through the virus outbreak and re-start afterwards, retaining as many employees as possible.
Key points are (note that this applies to the first phase of the furlough scheme – the scheme will change slightly from July onwards):
- Employer and employee must both consent to furlough
- The employee must have been on PAYE payroll on 28th February 2020
- Any type of employment contract is eligible (eg: full-time, part-time, temporary or zero-hours)
- The employee must not be on sick leave or self-isolated (SSP covers these cases)
- The self-employed are not eligible
- Employees on reduced hours are not eligible (regular benefits may be payable)
- Employees with several jobs can be placed on furlough by more than one employer
- Employees previously made redundant can be re-employed on furlough terms
- The employee is paid in the usual way, up 80% of the usual amount, to a maximum of £2,500 pcm
- The employer applies for a grant from the government to cover this amount
- Taxes and pension contributions are paid in the usual way
- Employers can pay more than the 80% limit if they choose to
- Furlough lasts a minimum of 3 weeks and a maximum of 3 months, but can be extended
When on furlough
- The employee can do no paid work for the employer when on furlough
- Training or volunteering are permitted, if unpaid
- The employee can work for another employer when on furlough, where permitted under their contract
- Furloughed employees can be made redundant – the usual rules apply
The HMRC “portal” to be used by employers to claim under this scheme became active on 20th April and can be found here.
To use the portal, an employer must have a Government Gateway ID and password. Around 5,000 HMRC employees have been detailed to support users.
Users are advised to have all information ready before using the portal, as there is currently no “save and return” option and applications “time-out” after 30 minutes of inactivity.
New documents have been issued by HMRC to assist employers in making use of CJRS, including a step-by-step guide and guides to calculating entitlements.
HMRC has promised that payments will be made promptly, usually within 6 days of an application being completed.
Advice for employees
Advice for employers