On 26 March 2020 the Government introduced a Job Retention Scheme to support businesses’ and you as an employee.
- The online service you’ll use to claim is not available yet. We expect it to be available by the end of April 2020.
- The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).
- Employers can use a portal to claim for 80% of furloughed you’ (you on a leave of absence) usual monthly wage costs,
- up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
- Employers can use this scheme anytime during this period.
The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.
- As a tenant you are still liable for rent and you should pay this as usual. If you face financial hardship and struggle to pay this, support is available.
- In the first instance they should speak to their landlord if they think they will have difficulty meeting a rental payment, and in this unique context we would encourage tenants and landlords to work together to put in place a rent payment scheme. However we have also put specific measures in place:
- As part of the workers’ support package, the Chancellor announced the government will pay up to 80% of a worker’s wages, up to a total of £2,500 per month, where workers are placed on the Coronavirus Job Retention Scheme.
Both you and your employer must agree to put you on furlough - so speak to your employer about whether they can claim. You cannot apply for the scheme yourself. Once agreed your employer must write to you confirming you have been furloughed to be eligible to claim.
Any UK employer with a UK bank account will be able to claim, but you must have been on your employer’s PAYE payroll on 28 February 2020. You can be on any type of contract, including a zero-hour contract or a temporary contract.
Claim for your employee’s wages through the Coronavirus Job Retention Scheme
Find out if you’re eligible and how much you can claim to cover wages for you on temporary leave (“furlough”) due to coronavirus (COVID-19).
Who can claim?
Any UK organisation with you can apply, including:
- recruitment agencies (agency workers paid through PAYE)
- public authorities
You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.
Public sector organisations
The government expects that the scheme will not be used by many public sector organisations, as the majority of public sector you are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.
Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.
Furloughed you must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:
- full-time employee.
- part-time employee.
- Employee’s on agency contracts.
- Employee’s on flexible or zero-hour contracts.
The scheme also covers you who were made redundant since 28 February 2020, if they are rehired by their employer.
This scheme is only for you on agency contracts who are not working.
If you are working, but on reduced hours, or for reduced pay, then you will not be eligible for this scheme.
- Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
- To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
- You hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
- You do not need to place all your you on furlough. However, those you who you do place on furlough cannot undertake work for you.
If you are on unpaid leave
If you are on unpaid leave you cannot be furloughed, unless you were placed on unpaid leave after 28 February 2020.
If you are on Statutory Sick Pay
- You on sick leave or self-isolating should get Statutory Sick Pay but can be furloughed after this.
- You who are shielding in line with public health guidance can be placed on furlough.
If you have more than one job
- If you have more than one employer, then you can be furloughed for each job.
- Each job is separate, and the cap applies to each employer individually.
If your employee does volunteer work or training
You can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.
However, if you are required to for example to complete online training courses whilst you are furloughed, then you must be paid at least the NLW/NMW for the time you spend training, even if this is more than the 80% of your wage that will be subsidised.
If your employee is on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay
- If you are on or plan to take Maternity Leave you must take at least 2 weeks off work (4 weeks if you work in a factory or workshop) immediately following the birth of your baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth.
- If you are eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and you are entitled to claim up to 39 weeks of statutory pay or allowance.
- If you qualify for SMP you will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently £148.68 a week, rising to £151.20 a week from April 2020.
The same principles apply if you qualify for contractual adoption, paternity or shared parental pay.
Work out what you can claim
- Employers need to make a claim for wage costs through this scheme.
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.
The government will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.
Full time and part-time employees
If you are full time or part-time:
- You should receive your actual salary before tax, as of 28 February 2020 and this should be used to calculate the 80%.
- If the employee has been employed (or engaged by an employment business) for a full twelve 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.
- If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.
Employer National Insurance and Pension Contributions
All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed you.
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 £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
You can choose to provide top-up salary in addition to the grant. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards)
National Living Wage/National Minimum Wage
Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.
Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.
However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
What you’ll need to make a claim
Your employer should discuss with staff and make any changes to the employment contract by agreement.
To claim, your employer will need:
- your ePAYE reference number
- the number of you being furloughed
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 weeks)
- your bank account number and sort code
- your contact name
- your phone number
Your employer will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
The online service you’ll use to claim is not available yet. We expect it to be available by the end of April 2020.
- You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for.
- Claims can be backdated until the 1 March if applicable.
What to do after you’ve claimed
- Once HMRC have received the claim and they decide you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
- Your employer should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.
- Your employer will pay all staff the grant they receive for the gross pay, no fees can be charged from the money that is granted. Your employer can choose to top up the employee’s salary, but you do not have to.
When the government ends the scheme
When the government ends the scheme, your employer must make a decision, depending on the circumstances, as to whether you can return to your duties. If not, it may be necessary to consider termination of employment (redundancy).
If you have been furloughed
If you have been furloughed you have the same rights as you did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.
Once the scheme has been closed by the government, HMRC will continue to process remaining claims before terminating the scheme.
Income tax and Employee National Insurance
Wages if furloughed will be subject to Income Tax and National Insurance as usual. You will also pay automatic enrolment contributions on qualifying earnings, unless you have chosen to opt-out or to cease saving into a workplace pension scheme.
Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.