Yesterday evening (26th March) the Chancellor announced a raft of measures aimed at supporting self employed workers. Later the same evening, the long awaited guidance on Furlough leave was published. There is a lot to it and we suggest you read the guidance in full in due course (link below) In advance of that we have summarised what we think are the key points and address the majority of questions we have had during the disruption.

We too will be going through the guidance in fine detail, if you have any questions please get in touch and as ever, we will try to help.

Summary:

It applies to any UK organisation with employees including:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities

The Furlough payment is £2,500 per month (gross) or 80% of salary, whichever is the smaller. Fees, commissions and bonuses are excluded.

Businesses can choose to top up to 100% but are not obligated to do so

Any organisation can claim as long as they had a PAYE system on 28th February

It applies to all types of employee

  • Full time
  • Part time
  • Agency workers
  • Zero / flexible hours

The Furlough period must be a continual period of at least three weeks

Employees made redundant after 28th Feb can be rehired and put on furlough

Furloughed workers cannot undertake any work for their employer but can do training

There is no support for workers on reduced hours or reduced pay

Employers will need to get agreement from their employees to put them on furlough – this may include collective consultation for larger numbers (20+)

Employers will also need to avoid discrimination so should ensure a fair process is followed to select employees for furlough

NMW does not have to be paid (i.e. if 80% takes the employee below NMW) except for any time spent training

Employees who were put on unpaid leave after 28th Feb can be furloughed

Employees who are ill or self-isolating will get SSP but can then be furloughed

Employees who are shielding can be furloughed

Employees who have more than one job can be furloughed by either or both

Employee tax, NI and pension contributions are due as normal

Employers NI and pension contributions will be paid by the government in addition to the employee pay in relation to the furloughed amount. The employer will be liable for contributions on the amount they top up above the minimum level

Payments will be based on pay at 28th February 2020 (they appear to have forgotten it is a leap year)

Pay for variable hours will be based on the higher of:

  • The same month’s pay last year
  • Average monthly earnings in 2019-20 tax year
  • If employed for less than a year, the average monthly pay since starting employment

Payments received by the organisation must be included as income when calculating taxable profits for Income Tax and Corporation Tax purposes.

LINK TO THE .GOV SITE:

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme