Due to the current crisis, many people have found themselves temporarily unable to work. The government is keen to keep people in their jobs. In order to avoid making redundancies, they have recently launched a raft of measures to protect income during this national emergency.
The Coronavirus Job Retention Scheme allows employers to place employees on furlough, meaning that they will still by employed despite not working, and can receive financial assistance during this time. Companies can access a grant for up to 80% of employees’ gross salary by utilising the Coronavirus Job Retention Scheme.
What is furlough?
A furloughed worker is someone who has been temporarily laid off because their employer doesn’t have work for them to do due to special circumstances. In the context of the Coronavirus pandemic, if supply chains break down or the requirement for business operations temporarily disappear, a business may need to reduce its operation – in some cases dramatically so. If you are a furloughed worker you will stay on your employer’s payroll, rather than being made redundant.
We're an organisation. How do we know if we're eligible to apply?
The government has said that any organisation is eligible for the grant, provided:
- They discuss the situation with their staff
- They register their affected employees as furloughed workers via the HMRC portal (details of which are still yet to be released)
- The affected employees don’t carry out work for the business whilst on “furlough”
There is other support available, including “Business Interruption” loans – more details can be found at this link.
Will we have to pay the money back?
The money to cover wages of Furloughed workers is a grant, so doesn’t need to be paid back.
Who can be placed on furlough?
Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
How much can we claim?
You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme. More guidance on how to calculate claims will be released before the scheme goes live.
For more information, please visit the gov.uk website.
I'm an employee - how will I know if I've been placed on furlough?
If you’re a permanent employee and your organisation no longer has enough work for you as a result of the pandemic, they will discuss with you a change in employment status to “Furloughed”. They will then register your details on the government portal.
Employers should discuss with their staff and make any changes to the employment contract by agreement. To be eligible for the subsidy, your employer should write to you confirming that you have been furloughed and keep a record of this communication.
How much income I will receive?
As above, your employer will be able to claim for 80% of your regular wage up to £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme, and your employer will make you aware of this.
What happens if I was laid off due to COVID-19, but before the announcement of this scheme?
The government has promised to backdate the grants to your business to 1st March 2020 – so they may have already been in touch. If not, try and contact the relevant person in that business to see if there is a way to access this scheme. This won’t always be possible but it may be worth the conversation.
How long will this last?
For PAYE staff, the government has initially guaranteed the support for a period of 3 months from 1st March 2020. There’s no indication of whether this will be reviewed in line with developments, but the government has said that it will “be extended if necessary”.
For the self-employed, the same time period applies (3 months), but the funding itself is unlikely to be available until the beginning of June.
Where does Statutory Sick Pay (SSP) fit into this?
SSP is a separate scheme, and is part of your usual employment rights. However, the Government has tweaked the guidelines in light of the current situation.
If you have had to self-isolate because of having symptoms of the Coronavirus or because a member of your household has, you may be eligible for SSP from Day 1 (rather than Day 4) of your isolation. The best link to follow is: https://www.gov.uk/statutory-sick-pay
I'm a temporary worker - how will this affect me?
If you are a PAYE temporary worker and still employed either by your temporary employer (client), agency or Umbrella organisation, the government is yet to announce how the Retention Scheme applies to temporary PAYE employees. For the time being, you can contact HR at your temporary employer, or speak to your agency or Umbrella organisation for further advice on what support you might have access to. As soon as we have more information on this, we will update this statement.
If you are a self-employed temporary worker (either via your own Limited Company, as a freelancer, or via the CIS scheme), we do know that the Job Retention Scheme is not applicable because you are not an employee.
However, the government announced yesterday (Thursday 26th March) equivalent support for self-employed workers: a grant of up to 80% of your average annual profits for the last 3 years, up to a maximum of £2,500 per month. If you don’t have 3 years’ worth of accounts, don’t worry – they will assess what you have, and if you are eligible for the grant, HMRC have said they will contact you directly.
The funding is on the following conditions:
- You are known to HMRC as a self-employed worker who obtains the majority of your income from self-employment
- You have filed a tax return for the 2018/19 tax year (the Government has extended the deadline from 31st January 2020 for 4 weeks from now for any late filers)
Funding for self-employed workers is expected to be available by the beginning of June. This is because the systems and portals HMRC and the Government will use are complex, and because the Government wants to allow for late filers of tax returns to submit their returns so they can qualify. The chancellor did confirm that the funding will be backdated for a period of 3 months, bringing the support in line with that announced on 20th March for PAYE staff who were furloughed because of the pandemic. In the meantime, if you need support with cashflow, you can set aside tax funds (because of the deferral of tax payment requirements), and use the above link to access information on grants or business interruption loans.
Note: There are some restrictions on the support available on this scheme, such as profit caps – more information to come as we get it. For now, if you have had work / payments via an agency as a self-employed worker, your Umbrella/Payment organisation may be able to help you on what steps to take next.
If you are a temporary worker and have been asked to leave site / leave work because of your symptoms, you may qualify for SSP.
If you are a temporary worker and you have been asked to leave site because the company has decided to stop operating (not because you are ill), SSP may not apply to this scenario. In this case, see the advice above in “I am a temporary worker”.
What else can I do to make sure I have enough funds?
This advice is for everyone affected, whether permanent or temporary employee. Depending on your circumstances, Universal Credit is another avenue for financial support in this uncertain time. You can find information here: https://www.gov.uk/universal-credit. In some cases, Universal credit can provide up to £1800 per month.
For more information on any of the guidance above, please visit the gov.uk website.