The advice given is that should employee and employer agree, a company may place the employee ‘on furlough’ where they’re unable to operate or have no work available due to coronavirus. The employer must write to the employee to state that they have been furloughed and should keep a copy of the correspondence. Employees can receive 80% of their wages, up to a monthly cap of £2,500 and they will continue to pay taxes in the usual manner. They will pay income tax, national insurance contributions and employee automatic enrolment contributions (on qualifying earnings), unless they have opted out of the scheme, or choose to stop contributing. Employees must not complete any work for their employer in the period in which they are on furlough, so must not provide services or generate any revenue. If employees are still working, but on, for example, reduced hours, then their employer must continue to pay them accordingly and will not be able to claim this back through the CJRS. Employees are still able to complete volunteer work or training, but if they are, for example, completing an online training course, they must be paid at least the National Living Wage (NLW) or National Minimum Wage (NMW) for the hours that they spend doing so. The guidance confirms that as NMW / NLW is only applicable to the hours someone works, it does not apply to furloughed workers as they are not carrying out any work.
It is hoped that the scheme will be operative by the end of April, and the grant will start on the day a person is placed on furlough and can be backdated to 1 March 2020.
Any UK employers with a UK bank account can claim, but employees must have been on their employer’s PAYE payroll on 28 February 2020. Employees can be on any of the following types of contract:
Full-time employees Part-time employees
• • • •
Employees on agency contracts
Employees on flexible or zero-hour contracts
This scheme is not applicable to the self-employed or to any income obtained through self-employment. There is a separate scheme that will be implemented for these individuals, as announced by the Chancellor, Rishi Sunak, on 26 March 2020. In circumstances where employees are on sick leave or self-isolating due to COVID-19, Statutory Sick Pay (SSP) is payable for that period, but they can be furloughed after this point. Individuals who are shielding in line with public health guidance should speak to their employer about whether they intend to place staff on furlough, but employers do have the option to place these people on furlough. The expectation is that not many public sector organisations will utilise the scheme as most public sector workers will continue to provide essential services for the duration of the coronavirus outbreak. Employers in receipt of public funding for staff costs should continue to use that money to pay staff as usual, and there is no requirement to furlough them. The same applies to non-public sector employers receiving public funding for staff costs. Organisations accessing public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.
For anybody made redundant after 28 February 2020, their employer can agree to re-employ them and instead place them on furlough.
Employees can be placed on furlough by one employer but continue to work for another. Those placed on furlough by more than one employer will receive separate payments from each employer.
For individuals earning less due to being on furlough, their Universal Credit payments might change to reflect this. For women on Maternity Leave, those eligible for Statutory Maternity Pay (SMP) or Maternity Allowance (MA), normal rules apply, and they will be entitled to 39 weeks of SMP or MA. For employers who provide more than the statutory rate of maternity pay, this falls within the wage costs that the employer can claim back through the scheme, and the same applies if individuals qualify for contractual adoption pay, paternity pay or shared parental pay. For those who are currently pregnant and due to start Maternity Leave, they should start their leave as normal. If someone’s earnings have reduced due to a period of furlough or Statutory Sick Pay (SSP) prior to the commencement of Maternity Leave, they should be aware that this may affect their SMP. Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February 2020. Claims can be for a minimum of three weeks and a maximum of three months, but this may be extended in dependent on how the situation relating to the outbreak of coronavirus evolves. Employers can choose to pay more than the grant but there is no requirement to do so.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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