Coronavirus Job Retention Scheme, Furlough and more: An employer’s guide

by Faareen Ali

The Coronavirus Job Retention Scheme has been brought in by the government to protect employees against the risk of being laid off from work, or dismissed. Lay- off means being placed on an unpaid leave, which this scheme works to prevent. Employers can claim a grant of 80% of employee wages, capped at £2,500, by ‘furloughing’ them. On Thursday 12 May, Chancellor Rishi Sunak announced an extension of this scheme until October, but requested that employers start to ‘share the cost’ of the scheme from August, by bringing employees back to work on a part time basis and paying up to a fifth of their furloughed employees wages, even when they remain closed. The  eligibility criteria remains unchanged since the recent announcements, and 7.5 million remain furloughed. It can however be anticipated that there will be a reduction in the number as many return back to work amid loosening of the lock down.

What is furlough leave? 

The term Furlough was used in the military for soldiers who took time off to visit their family. It has also been used for prisoners taking temporary leave of absence to attend funerals or for other special circumstances. It has been widely adopted by companies since, even before Coronavirus, to ensure sufficient access to staff who they could call upon during peak periods, and furlough during quieter months.

Who can apply?
  1. Businesses
  2. Charities
  3. Recruitment Agencies
  4. Public Authorities.

If you are registered for the PAYE Scheme and take dividends from your company, you are also able to furlough yourself, as you will not qualify for the Self-Employment Income Support Scheme.

How does it work?

Employers can now claim for employees on their PAYE payroll on or before 19 March 2020. However, in order to be eligible, the HMRC have asked to receive the RTI Submission (confirming payments made to employees, tax deductions, National Insurance and pension scheme contributions etc.) on or before the deadline of 19 March 2020. Employers must bear in mind that it is essential to have the employee’s consent to be furloughed, as it would involve changing their status, and in turn altering their employment contract.

This scheme also applies to those employees who were on the payroll before 28 February 2020, but ceased work or were made redundant, provided they were re-employed and had their RTI submission submitted on or before 19 March 2020.  The claim can either be submitted by the company, or acting agent, and payments are made within six working days.

What information do I need before claiming?

To be able to register, you must have the following details:

  1. Your UK bank account number and sort code
  2. Your PAYE scheme reference number
  3. Details of the employees being furloughed- including national insurance number, payroll and employee number
  4. The start date and end date of the claim
  5. Full amount claimed including National Insurance Contributions and Employer Minimum Pension Contributions
  6. Contact telephone number and  name for employee.

The government has advised that other details will also be necessary such as; 

  1. Your company name
  2. Your corporation tax unique taxpayer reference
  3. Your Self-Assessment Unique taxpayer reference
  4. Your company registration number. 

According to the HMRC guidelines, the employer can make or renew a claim under the job retention scheme up to 14 days before pay day, and the funds will be paid into their account six working days later. This is to help employees who are encountering financial difficulties.

How to claim:

The claim can only be made via Government Gateway by following the below link:

https://www.access.service.gov.uk/login/signin/creds or by calling HMRC on 08000241222 (options 1,3,2,1).

Useful links:

https://www.gov.uk/government/news/coronavirus-job-retention-scheme-up-and-running

https://www.gov.uk/government/publications/coronavirus-job-retention-scheme-step-by-step-guide-for-employers

https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme

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