Coronavirus Job Retention Scheme: Which employees are eligible?
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by COVID-19.
If you have any employees who have been placed on a leave of absence, they would be considered a furloughed employee. Employers can claim for 80% of furloughed employees’ usual monthly wage cost, up to £2,500 a month, plus the associated Employer NI contributions and minimum automatic enrolment employer pension contributions on that wage.
All UK companies are eligible: limited companies, sole traders who employ people, LLPs, partnerships, and charities. Employers can use this scheme anytime during this period. Claims can be backdated until the 1 March if applicable, and grants will be pro-rated if your employee is only furloughed for part of a pay period.
Which employees are eligible?
Prior to now, furloughed employees must have been on your PAYE payroll on 28 February 2020, but this has now been extended to 19th March. This brings into scope a large number of people who fell outside the scheme because they had recently changed jobs.
It’s available to all employees on a contract, including:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
You can claim for employees that were employed as of 19 March 2020 and were on your PAYE payroll on or before that date; this means that you will have made an RTI submission notifying HMRC of payment of that employee on or before 19 March 2020
Employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for you after that, and prior to 19 March 2020, can also qualify for the scheme if you re-employ them and put them on furlough.
A business may need to furlough all employees if it has temporarily closed down, as in hospitality or non-food retail. However, you do not need to place all your employees on furlough. You can choose to furlough a group of employees, whilst key workers continue to work, or to rotate groups between furloughing and working.
However, those employees who you do place on furlough cannot undertake work for you. This scheme is only for employees who are not working. While on furlough, an employee cannot undertake work for or on behalf of the organisation, but they may take on new employment with an alternative employer whilst on furlough.
Even if an employee is working, but on reduced hours, or for reduced pay, again, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of their employment contract.
Just a couple of different scenarios here...
- If an employee is on unpaid leave, they cannot be furloughed, unless they were placed on unpaid leave after 28 February.
- If an employee has more than one job they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually. Employees can be furloughed in one job and receive a furloughed payment but continue working for another employer and receive their normal wages.
- If an employee is on or plans to take maternity leave, the normal rules apply, and they are entitled to claim SMP. The same applies if the employee qualifies for adoption, paternity or shared parental pay.
- Employees who are unable to work because they have caring responsibilities resulting from COVID-19, for example, employees that need to look after children.
When calculating claim values for directors of owner-managed companies you can only consider the salary that has been subject to PAYE, not any dividends paid to those directors. They are essentially furloughing themselves, and the understanding is that they do no income-generating work for their business while on furlough, but they can continue to run the business from a statutory perspective, for example preparing their accounts and returns. This also applies to salaried individuals who are directors of their own personal service company (PSC).
Furlough Pay or SSP?
You can claim back from both the Coronavirus Job Retention Scheme and the SSP rebate scheme for the same employee but not for the same period of time.
- When an employee is on furlough, you can only reclaim expenditure through the Coronavirus Job Retention Scheme, and not the SSP rebate scheme.
- Likewise, if a non-furloughed employee becomes ill, or needs to self-isolate or shield themselves, then you might qualify for the SSP rebate scheme, enabling you to claim up to two weeks of SSP per employee.
Furloughed employees retain their statutory rights, including their right to Statutory Sick Pay. This means that furloughed employees who become ill must be paid at least Statutory Sick Pay (subject to them meeting the eligibility criteria).
It’s up to employer to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate.
- If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although they may qualify for a rebate for up to 2 weeks of SSP.
- If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to claim for these costs through the furloughed scheme.
If an employee has a condition which makes them extremely vulnerable and received a letter from the NHS, they are strongly advised to shield themselves. Employers can claim for furloughed employees who are shielding, if they are unable to work from home and you would otherwise have to make them redundant. This also applies to those who need to stay home with someone who is shielding.
An employee can be furloughed for a minimum period of three consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.
The scheme is available for three months from 1 March, although the government might extend the scheme. The individual could remain furloughed even if the scheme is not extended, but in this instance, the employer would not have any grant funding to cover their wages. Depending on your circumstances, it may be necessary to consider termination of employment (redundancy). Grants cannot be used to substitute redundancy payments.
Join BrightPay for a free COVID-19 webinar where we discuss what you need to know about remote working, processing SSP, the Coronavirus Job Retention Scheme and placing employees on furlough leave.
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