Furloughing employees under the 80% wages grant scheme (Job Retention Scheme) – update

Employers are now furloughing employees where needed. HMRC’s new online portal to reclaim the 80% is not yet up and running; we’re told it will be by the end of April.

Here’s what you should know about furloughing:

• Prior to deciding to furlough employees, if you have contracts of employment; check these; not all provide for temporarily laying off and so amendment might be required to validate the furlough (we have a contact who can help with these amendments).
• Employees cannot choose to be furloughed; it’s the employers decision.
• Some employers are still trading but have reduced the hours worked by their staff; this does not qualify for the 80% scheme.
• The 80% grant does not have to be repaid by the employer at a later date.
• Not all employees have to be furloughed but it is worth while documenting the reasons for decisions to furlough.
• A worker should be issued with a notification letter confirming the furlough; here is a link for a template letter you can adapt.
• Furloughs must be for a minimum of 3 weeks; for the employer to qualify for the 80% claim but after 3 weeks a worker can be taken off furlough if required (or can be made redundant but do seek advice before taking the action of redundancies).
• Furloughed employees cannot undertake any work for their employer while on furlough, nor can they take up employment elsewhere (guidance is awaited on whether they can seek work elsewhere to make up the 20% of their normal earnings which they are not currently being paid). They can, however, undertake training whilst furloughed.
• The 80% reclaimed by employers is based on 80% of; gross wage plus employers NIC plus employers pension contribution.
• You can top up their wages beyond 80% but you’ll only be reimbursed 80% of their average earnings up to a monthly cap of £2.5k per employee.
• Claims for 80% of wages relating to workers furloughed in March, can be included in an online claim once the HMRC portal is set up; keep a note of what has been paid to those workers.
• The scheme is intended to be a reimbursement scheme so it is envisaged that the employer will have to make the payments to employees first and then seek reimbursement from HMRC. We are not sure how this will work for some businesses who do not have access to cash reserves nor borrowings to fund upfront payment of wages.
• As with the other measures announced, there are still parts of this new scheme that clarification is not yet available for e.g treatment of those of maternity leave, those working shorter days, holidays, the sick or self-isolating.

Holiday entitlement – change to the rules

The rules have been changed temporarily. Workers who have not taken all their statutory annual leave entitlement this year due to the coronavirus will be able to carry it over into the next two leave years where it is not reasonably practicable for a worker to take some, or all, of the holiday to which they are entitled due to the coronavirus. Up to four weeks can be carried over.