* Updated 12 June 2020
*Updated 12 May 2020
* Updated 26 April 2020
How can I manage my employees during this time?
You have a couple of options available to you, if possible you should first try to Furlough your employees.
What does Furlough mean?
This means you do not have work for your employees at the moment and cannot afford to have them in the business, so instead you put them on temporary leave instead.
They will not be able to:
- Make money for your business or any company linked or associated to you.
- Provide any service to your business or any company linked or associated to you.
The government has set up a scheme called the Job Retention Scheme that sets out the following:
Who is covered?
- If you are on any of the following contracts you will be covered under this scheme: Permanent employment contract, zero-hour contract, temporary contract, Fixed-term contract.
- Foreign nationals are also included under this scheme as long as they are under one of the contracts above.
- Employees must have been furloughed on or before the 10th June to be eligible for furlough after the end of June (they meet the 3 week furlough period).
* Please note if you have any self-employed individuals– you should refer them to Self-employment income support scheme.
What are the key dates?
If the employee is on your payroll as of the 19th March 2020 and you notified HRMC on an RTI submission on or before the 19th March 2020 then you should be able to claim for the employee.
- If the employee was made redundant on or after the 28th February 2020, you could re-employ that individual (employee) and then Furlough them as they would now be included in the scheme to which you can claim.
- The government updated the rules and an employee must have been furloughed before the 10 June 2020 for the 1st time.
- From the 1 July to things are happening:
- Employers will be able to bring back employees part time (flexible furlough).
- Claims will be restricted to employees currently using the scheme and have previously been furloughed.
What can my employees do while they are furloughed?
The guidance states that employees must not do any work for their employers whilst furloughed.
You cannot ask your employee to do any work that:
- makes money for your organisation or any organisation linked or associated with your organisation provides services for your organisation or any organisation linked or associated with your organisation
If you ask the employee to conduct some online training, then this would be OK, but you must ensure that the employee receives at least National Minimum Wage/National Living Wage for the training time.
Can my employee work somewhere else or volunteer?
If your employee wants to work for another business or volunteer, they must ensure they the business is not associated with your business in anyway. If it is completely separate then they may do so, however, check their employment contract as they may need your permission to do so.
How much can I claim from the Government?
If your employee is eligible as covered in the points above, then you can claim:
- From March – August up to 80% of their gross salary from the government up to a maximum amount of £2,500 per month (In August and further months the employer will need to also pay the employers national insurance and employers minimum automatic enrolment pension contributions).
- From 1 September 70% of their gross salary from the government up to a maximum of £2,187.50 for the month. The employer will have to make up the extra 10% of salary to make the 80% total, to a cap of £2,500.
- From 1 October 60% of their gross salary from the government up to a maximum of £1,875 for the month. The employer will have to make up the extra 20% of salary to make the 80% total, to a cap of £2,500.
Note: Any caps are proportional to the hours not worked by the employees.
- The amount covered is for basic wages only and does not cover variable overtime, bonus or commission payments.
- You will continue to pay your employees through the usual PAYE way but would receive a grant from the Government. *All statutory deductions will still be due on the salary i.e NI, Tax, Pension (unless you agree a pension holiday).
- To be able to put an employee on Furlough you will need to write to them to change their terms of employment (You will then be able to claim for this employee once they agree in writing).
- Any money claimed on behalf of the employee must be paid to them, you cannot pay them less.
The claim is for a minimum of 3 consecutive weeks and has been extended to the end of October, when the scheme will then be due to close.
- You can take them off of Furlough and put them back on if required for a minimum of 3 weeks at a time.
How do I claim from the Government?
There will be an online portal through which you will make applications under the scheme (not yet available) The Government’s aim is that it will available on 20th of April 2020.
- Payments can be backdated to 1st March 2020 where applicable.
- You will be able to make one claim under the scheme every three weeks.
- As of 1 July you will be able to claim for days instead of weeks (flexible furlough)
To make a claim, using the current guidance you will need to provide:
- PAYE reference number;
- Amount of employees being furloughed;
- National insurance numbers, names and payroll/works numbers of the employees being furloughed;
- Company self assessment or corporation tax unique taxpayer reference or company registration number;
- Start and end dates for the period of furlough being claimed;
- Amount that is being claimed; and
- Contact details, bank account number and sort code.
How do I enter the data?
- For up to 99 employees you will need to manually enter this on the HMRC’s claim system
- For 100 or more employees you can upload a file with the relevant information using an Excel, CSV or OpenDocument files (files ending .xls, xlsx, csv or ods.)
* Note: the HMRC will be able to retrospectively audit these figures are in line with the above criteria and guidance.
What can I pay my Employee?
The point above clarifies as an employer what you can claim but it doesn’t mean that is all you have to pay.
- Should you wish you can top the employee’s salary up, this can be anywhere from the 80% the government grant covers to 100% of their salary.
- You do not have to make any extra payments to salary if you are unable to do so.
- The employee cannot receive any less than the 80% grant claimed (*based on gross salary per month).
- The 80% government grant will reduce to 70% and 60% as detailed above.
- During the flexible furloughing period any hours worked but the employee should be paid as per the employment contract and would not be subsidised by the government.
How do you deal with sick pay under this scheme for Covid-19?
- Sick leave and pay for Covid-19 should be treated in the usual way, either by statutory Sick pay (SSP) or if you have enhanced company sick pay.
- You can Furlough an employee at any time and if they are on sick leave at the time, this would cease and they would be paid under the claim criteria above.
- For further information click here to the SSP article
How do I deal with annual leave while an employee is Furloughed?
- Employees will continue to accrue annual leave while they are furloughed
- An employee can take holiday leave while they are furloughed, you will just need to top up the payment to their full pay.
An Employee refuses to go on Furlough what are my options?
Your employee can refuse to go on furlough should they wish. As a business you may need to look at alternative options such as:
- Unpaid leave, using holiday pay during this time
* Note: With the alternative measures this should still follow the usual process and protections in place by the legislation.
An Employee is returning from statutory leave what can I do?
This covers employees on or returning from maternity leave, paternity leave, shared parental leave, adoption leave, parental bereavement leave and sick leave.
As with other employees, the employee can be furloughed on their return.
If their pay varies, and you are looking to furlough the employee on their return from statutory leave then you should calculate their salary based on either:
- same month’s earning from the previous year
- average monthly earnings for the 2019-2020 tax year.
* Note: this is on salary and not on pay. I.e it is the gross amount before any deduction to pay have been made.
There are also other schemes available under the Government to support both your business and also the individual in this pandemic such as business interruption loans, universal credit for individuals and more, here is the link to the government site.
Whether you would like support in Furloughing your employees or you are looking at other options such as redundancy, our HR Consultants can support you through these uncertain time so get in touch.
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