What is a furloughed worker?
A furloughed worker is an employee who is required to be temporary laid off work. In this case that means anyone asked to stop working during the Coronavirus pandemic but who are furloughed and kept on the payroll, rather than losing their job.
Directors who are paid a salary via PAYE can also be furloughed and be included in the scheme.
All UK businesses are eligible.
Which of my employees are eligible to be furloughed?
For full time and part time salaried employees, you should claim on their actual salary before tax, based on the last RTI submission prior to 19 March 2020.
For employees on flexible or zero-hour contracts:
Employed by you for over twelve months
• Use same month’s earnings from the previous year, or;
• Average monthly earnings from the 2019-20 tax year
Employed by you for less than twelve months
• Use average 2019-20 tax year monthly earning, pro-rata for the period employed by you.
What will I receive?
The grant from HMRC will cover the 80% wages of the furloughed employee (up to £2,500 per month) plus the associated Employers National Insurance contributions and minimum automatic enrolment pension contribution.
An example: Full time employee earning £2,400 each month (based on 2020/21 allowances) £
Furloughed gross wage (80%) 2,000.00
Employers national insurance 176.73
Employers pension contribution (3%) 60.00
Total received from HMRC 2,236.73
When will I be reimbursed?
Grants are to be backdated to 1 March 2020 for all eligible employees, including those that were made redundant after this date as a result of Coronavirus, providing that they have been reinstated.
The scheme was originally open for three months from 1 March to the end of May but has now been extended until August 2020.
The online portal is now live. The portal can be accessed here.
Coronavirus Job Retention Scheme – FAQs
What if we have already laid staff off, or made them redundant?
The Chancellor has confirmed that the scheme is backdated to 1 March 2020, therefore any lay-offs, or redundancy measures taken since that date could be reversed and covered by the scheme.
What if we are in the middle of a redundancy exercise?
Our advice would be to pause the redundancy exercise and instead furlough the employees that are currently at the risk of redundancy.
Is the £2,500 the gross or net amount that can be paid?
The £2,500 is the gross amount that can be paid. The furloughed employees wage is still liable to deductions of tax, national insurance and pension contributions.
What about auto-enrolment pensions?
The furloughed employees salary is still liable to pension contributions. The grant received from HMRC will include the 3% employers contribution, if you pay more into the pension on behalf of your employees, you will be liable for the difference.
Can employees who have been ‘furloughed’ come in to work at a later date and then be ‘furloughed’ again?
Employees can be furloughed for a minimum of three weeks. You could then rotate staff should you feel this would be of benefit to your business.
What about employees who have lost most but not all of their available work? Can they receive anything?
Any furloughed employees cannot complete any work on behalf of the business, so therefore, these employees would not be eligible for a payment under the CJRS.
What about any employees that I have that are currently on maternity, paternity or shared parental leave?
Any employee who is on or due to begin their statutory leave, will continue to receive the statutory payment. Any enhanced contractual leave you pay in addition to the statutory payment can be included in the wage costs that you can claim through the scheme.
What will I need to make a claim?
In order to complete the claim, the following information will be required and we would recommend that this is prepared prior to accessing the portal:
- Your UK bank account number and sort code
- Your employer PAYE scheme reference number
- Your Self-Assessment UTR (Unique Tax Reference)
- The number of employees being furloughed
- Each employee’s name, employee number and National Insurance number
- The start date and end date of the claim (you can only submit a claim once every three weeks)
- The full amount you’re claiming for, including employer National Insurance contributions and employer minimum pension contributions
- Your contact name and phone number for HMRC to call you with any questions
We will continue to update our guidance as more information is published from the Government.