Harts CHARTERED ACCOUNTANTS

Coronavirus Job Retention Scheme – Furlough

16th Nov
Self Employed

Following on from our previous emails, the government has now provided detailed guidance on how the extended Coronavirus Job Retention Scheme (furlough scheme) in place since 1st November is to operate.

It is in many ways very similar to the scheme as it operated in August, however, there are some significant changes to eligibility and processes. In many ways, it should be seen as the third version of the scheme following the initial 3-week minimum period furlough which operated between March and June, and the flexible scheme limited to those who had previously been on furlough, which operated between July and October. We would therefore recommend that everyone reviews the terms of the scheme even if they have had employees on furlough for several months and were comfortable with how the previous schemes operated.

Who is eligible?

Any employee who was employed on 30st October 2020, provided that an RTI submission was made for that individual between 20th March and 30th October 2020. This will be the case for anyone paid through payroll before 30th October. It means that employees who have joined a business since the spring are now eligible as the cut-off date was previously 19th March.

For claims for periods after 1st November 2020, the employee does not have to have been furloughed previously, nor does the employer required to have used the scheme previously. This is another big change from the scheme as it operated between July and October.

From 1st November 2020, the maximum number of employees for which an employer can claim is no longer capped.

However, it remains the case that the employee must NOT work for the employer or a connected business when they are on furlough. There are only very limited exceptions for training and for directors carrying out statutory duties. Furloughed employees may work for another unconnected employer.

How much can be claimed?

Until January, an employer can claim 80% of the employee’s earnings for hours not worked, up to a maximum of £2500 per month. The government has not confirmed the amount that it will pay in February and March.

The employer will not have to make any contribution towards the employee’s earnings for the unworked hours, but will have to pay the employer NIC and employer pension contribution arising from the unworked hours.

For employees who have been on furlough previously, or those who were on payroll on or before 19th March and are now being furloughed for the first time, the furlough claim is still based on their earnings in March (any pay rises in the intervening period are not taken into account). For employees taken on since April, the claim is based on their October earnings (or their average from the period they from when they started to October for those with variable earnings).

Is it flexible?

Yes, the scheme remains fully flexible. An employer can furlough employees full or part time. The government guidance states that the scheme is not intended for short-term absences from work due to sickness and that short-term sickness or self-isolation should not be a consideration in deciding whether to furlough an employee. However employees who are clinically extremely vulnerable (and so who are currently advised not to work outside the home) may be furloughed.

Can pay be topped up?

Yes, employers can, but are not required to, top up the pay of their employees to 100% for unworked hours. Employers are required to pay 100% of normal pay for periods when employees are on holiday and also on furlough.

Deadlines

The final deadline for making claims for periods up to 31 October 2020 is 30 November 2020. Claims for November onwards must be submitted within 14 days of the end of the month, ie claims up to 30 November must be submitted by 14 December, claims up to 31 December must be submitted by 14 January 2021 and etc.

Agreements with employees

Putting a member of staff on furlough constitutes a change to their employment contract. It remains the case (as with the previous versions of the furlough scheme) that to be eligible for the grant that employers must have confirmed with the employee in writing that they are being put on furlough. This must be kept for five years, along with records detailing the hours worked by the employee and those for which they are on furlough.

The government has confirmed that the employee does not have to provide a written response.

What else should I know?

From December 2020, HMRC will be publishing the employer name and company registration number of businesses which make use of the furlough scheme. There is no exemption for small businesses. Therefore if you do not want your business’s use of the furlough scheme to be public, you should not make claims going forward.

The government has also said that “it is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1st December 2020”. Further guidance is expected in late November, however, it is likely that it will not longer be possible to claim furlough monies for individuals who are being made redundant. It is understood that the government’s objective with the furlough scheme is to protect viable jobs (which will return) rather than to provide a general subsidy and the likely change should be seen as part of this.

The Job Support Scheme (both Open and Closed) versions have both been curtailed indefinitely. The Job Retention Bonus of £1000 for previously furloughed employees which was due to be paid in February has also been cancelled, though the government has said it intends to introduce a different retention incentive at the appropriate time.

Harts Webinar Series: Success in a Changing Landscape

We continue our series of seven fortnightly interactive webinars to help keep your business agile, proactive and thriving in uncertain times. Each 45-minute sessions, hosted by Steven Glicher and guests, are designed to provide practical, really useful information and the opportunity to discuss any issues raised.

Our next seminar ‘Discussion Group’ will be held on Tuesday 17th November. In the meantime visit our YouTube page to catch up on all the previous webinars in the series including this weeks seminar ‘Value & Pricing’.

Cheadle Office is now Open

Our Cheadle office is now open with restricted hours, please contact us before visiting.

However, Macclesfield Office remains open normal hours.

Get in Touch

Call or email us at Harts if you have any queries about topics covered above or to find out more about our services at Harts, call us on 01625 669669 or email info@harts-ltd.com

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Take Care

The team at Harts