Staff Furloughs

These are the main points of the government's Coronavirus Job Retention Scheme.

1. This scheme is designed to assist employers' payroll payments, to avoid employers making staff redundant.

2. The scheme applies to employers severely impacted by the Coronavirus - those employers who have had to place their organisations in hibernation effectively.

3. The scheme will be in place for four months, from 1st March 2020, but this may be extended should the lockdown (or a part-lockdown) extend beyond this.

4. The scheme will pay 80% of an employee's pay, up to a maximum of £2,500 per month. Plus associated NI and employer pension contributions.

5. It only covers basic pay; it does not include any other elements of pay, for example, bonuses, sales target payments, travel allowances, dividends, share options etc. So if a sole company director pays a mixture of salary and dividends, they can only claim the salary element.

6. The payments are being termed as "grants", so at some point, HMRC will seek to recoup the money paid out, either directly or indirectly from the employer (and via general taxation).

7. The furlough period will run for periods of three weeks; this is in-line with government advice on the lockdown period and restrictions.

8. Furloughing can apply to full or part-time staff.

9. Furloughing covers the following - employees, workers, agency workers, those on zero-hour contracts and apprentices.

10. The employer can select which staff to furlough, but this must be done in a fair and transparent way. Otherwise, the employer could risk possible discrimination claims, or if staff are instead made redundant - possible unfair dismissal claims.

11. Employers cannot claim for furloughed staff and then make those same members of staff work - this is fraud. At the time of writing, HMRC is opening a fraud reporting telephone line, so that employers engaging in this can be reported.

12. All furloughed staff are subject to their existing current employment terms, as they are still employed. This includes common terms, such as confidentiality, non-compete and other restrictive covenants.

13. Employers can decide whether to pay the 20% difference to bring employees up to full pay. Employers can also decide whether to continue paying any other non-salary remuneration or allowances. Employers should explain why they have decided not to top-up their employees' pay.

14. Employers should tell staff how they can keep in touch with the employer during the furlough period.

To Claim

For employers to claim they must have the following:

1. Have an operational PAYE scheme in place on or before 19th March 2020.

2. Enrolled for PAYE online.

3. Have a UK bank account for payments.

4. Furloughed workers must have been on the PAYE payroll and included in Real Time Information (RTI) submissions to HMRC on or before 19th March 2020.

5. Claims under the scheme can be backdated to 1st March 2020.

6. HMRC is currently stating that payments will be made six days after acceptance into the scheme.

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CompactLaw Staff Furlough Letter