Accessing the Coronavirus Job Retention Scheme

Accessing the Coronavirus Job Retention Scheme

ARTICLE · By Timber Trade Federation · 27 March 2020

As business slows, we expect many of our members will be looking to access Government support. One of the key schemes announced last week is the Coronavirus Job Retention Scheme.

While the term ‘furlough’ was little used, since a week ago it has become set to enter the common language of many employers and employees around the country.

When a worker is furloughed, this means they will no longer be working. However they will stay on your books and continue to be paid.

The Government will then allow you as an employer to claim back up to 80% the wages paid to your employee, up to £2,500. HMRC continue to issue more details on the scheme.

Below we’ve sought to provide answers to some of the FAQs about this scheme.

What does it mean to furlough a worker?

This scheme is meant to offer an alternative to redundancy. By furloughing an employee, you keep them on your books and employed, with the Government providing compensation.

Who is eligible for the scheme?

It is available to all businesses with a PAYE scheme.

How can my business access the scheme?

You will need to:

  • designate affected employees as ‘furloughed workers,’ and notify your employees of this change. Set this out in writing.
  • changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

 

Can my employee continue to complete work for me while furloughed?

No. If an employee is working, including if they are placed on reduced hours, or for reduced pay, 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 the employment contract you agreed.

How much will I be reimbursed?

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month and is working urgently to set up a system for reimbursement.

The associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage are included. However, fees, commission and bonuses should not be included.”

What about the remaining 20% of my employees’ wages?

Employers are not obliged to top up the remaining 20% but employers can ask employees for their consent to this reduction in their wages, and it is expected that they will consent if this is considered preferable to redundancy or unpaid leave.

How does the scheme work for employees whose pay has varied?

If the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019-20 tax year

 

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

How do I make a claim?

HMRC are working to make an online portal.

However we know in order to make a claim you should keep strong records, and you will need to provide:

  • Your ePAYE reference number
  • The number of employees being furloughed
  • The claim period start and end date
  • The amount claimed (per the minimum length of furloughing of three weeks)
  • Your bank account number and sort code
  • Your contact name
  • Your phone number

 

How long will the Coronavirus Job Retention Scheme run for?

The intention is for the Coronavirus Job Retention Scheme to run for at least three months from 1 March 2020. This time frame will be extended if the government deems it necessary.

More information:

Claim for wage costs through the Coronavirus Job Retention Scheme