Job Retention Scheme Extension
If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees and apply for a grant to cover a portion of their usual monthly wage costs where you record them as being on furlough.
The Coronavirus Job Retention Scheme will remain open until 31 March 2021. You can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.
You can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where you have re-employed an employee after 23 September 2020. The government will review the scheme in January 2021.
All employers with a UK bank account and UK PAYE schemes can claim the grant. You do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.
Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.
Employers can continue to claim for periods ending on or before 31 October 2020 until the deadline on 30 November 2020. You might need to contribute towards the cost of your furloughed employees’ wages for these periods. For periods from 1 November 2020, you will only need to pay for the cost of employer NICs and pension costs.
Who can claim?
If you’re claiming for a period that ends on or before 31 October 2020, you can only claim if you have previously furloughed your employee before 1 July 2020 and you have submitted a claim for this by 31 July 2020. This may differ if you have an employee returning from statutory parental leave.
If you are claiming for a period that starts on or after 1 November 2020, then you can only claim for furloughed employees that were employed and on payroll on 30 October 2020. This means you must have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where you have re-employed an employee after 23 September 2020.
There are some exceptions explained in this guidance for employees returning from parental leave and military reservists, where this cap may not apply.
If you made employees redundant, or they stopped working for you on or after 23 September 2020 you can re-employ them and put them on furlough. This applies as long as the employee was employed and on your PAYE payroll on or before 23 September 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made between 20 March and 23 September 2020.
Furloughed employees continue to accrue leave as per their employment contract.
The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.
Employees can take holiday whilst on furlough. If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.
Employees should not be placed on furlough for a period simply because they are on holiday for that period. Working Time Regulations (WTR) require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the last 52 working weeks (twelve weeks in Northern Ireland). Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.
Employers will be obliged to pay employees who are on holiday additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given. This applies for both the furlough period and the recovery period.
If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.
Further information regarding the scheme can be found here.