On the 31st October, the government decided to extend the Coronavirus Job Retention Scheme (CJRS) to 31stMarch 2021 to help businesses and people across the UK with additional financial support.
For employers, if you cannot maintain your workforce due to the impact of COVID-19, you can furlough employees and apply for a grant to cover a portion of their monthly wage. You can still bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim for hours not worked.
For the employee, this means that your employer can apply for a grant to cover part of your regular wages for anytime spent on furlough, up to a monthly cap of £2500. You will still be paid by your employer and pay taxes from your income. You however cannot undertake any work for your employer whilst on furlough.
Employers will have to pay your wages for the hours you work as normal, as well as employer National Insurance and employer pension contributions. The employer must also pay to HMRC the employer National Insurance contributions on the full amount that they pay you.
For employees or contractors that were previously employed and on the payroll on 23 September 2020, but were then made redundant or stopped working for their employer, they can be re-employed and then claimed for under the scheme. The employer must have made a PAYE Real Time Information submission to the HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.
Whilst on furlough, an employee must not do any paid work for their employer, nor must that undertake any services for their employer or organisations linked to their employer. They may however undertake the following –
- Training (see training below)
- Volunteering for another organisation
- Paid work for another organisation (if contract allows)
Employees will retain their rights whilst on furlough, which includes statutory sick pay, annual leave, maternity or paternity leave, rights against unfair dismissal, redundancy payments and statutory minimum wage for any hours worked.
There is no minimum furlough period and agreements can last any amount of time. However, the minimum claim period must be 7 consecutive days. Employees can also enter into a flexible furlough agreement more than once and employers should discuss with their staff and make any changes to the employment contract by agreement. When decisions are being made on who to furlough, please note that employment, equality and discrimination laws will apply in the usual way.
Training whilst on furlough
Furloughed employees are free to engage in training during furloughed hours, as long as during the training the employee does not provide services or generate revenue for the organisation.
If an employee is asked to partake in training during furloughed hours, the employee is entitled to be paid the national minimum wage for their age for the time in training. The majority of the time, the furlough payment of 80% of the employee wage, up to £2,500 should be sufficient, however should the employee spend any additional hours in training that exceeds the furloughed amount, then the employer will need to pay the entitled minimum wage to the employee.
There are two types of furlough –
Fully furlough – where an employee does no work for the employer
Flexible furlough – employees can work for any amount of time, and any work pattern and can claim for the furloughed hours.
During the process employers must:
- Make sure the furlough agreement is consistent with employment, equality and discrimination laws
- Keep a written record of the agreement for 5 years
- Keep records of how many hours their employees work and the number of hours they are furloughed for 6 years.
How much will an employee get paid?
From 1 November 2020, employers will be able to claim a grant for 80% of usual wages up to a maximum government grant of £2,500 per month per employee. The employer will need to pay their employees for the time work and use the government grant for the time not worked. The employer will not need to contribute towards the 80% of the employees’ usual wages for the hours not worked. Employers can however top up wages at their own expense.
This scheme does not apply if you are self-employed or to any income from self-employment. You may qualify for support under the Self-employment income support scheme. For further information on the Coronavirus Job Retention Scheme, please refer to the government website or via the ACAS website.
If you’ve been made redundant and need advice on how much you will be paid, have a read of our calculating your redundancy pay article.