UHY Ross Brooke Chartered Accountants

The Government’s New Furloughed Workers Scheme

Simon Fenton

We are grateful to Simon Fenton of  Constantine Law for this summary of the current position. Simon is an employment law solicitor and for any advice on this matter can be contacted  simon.fenton@constantinelaw.co.uk or 07867 528 505

  • The scheme will be open to all UK employers to get financial support so they can pay part of the furloughed worker’s salary costs if they would otherwise have been laid off from work during this crisis.
  • The term ‘laid off’ in this context is being used to mean those who would be made redundant, put on short time working or unpaid leave.
  • It will apply to all private sector organisations with staff on PAYE, regardless of whether they are limited companies, sole traders, partnerships, charities etc
  • Furloughed workers cannot undertake any work for the employer whilst furloughed
  • The employer will need to designate the affected individual as a furloughed worker and tell them of this change, subject to the normal provisions of employment law.  Crucially the furloughed worker must agree to become a furloughed worker.  This cannot be simply imposed on the individual.
  • Reimbursement by the state will be subject to providing HMRC with information about those furloughed and their earnings via a new online portal, which is currently in development.
  • It will be backdated to 1 March and is expected to be available before the end of April
  • It is open for an initial three month period, and this could be extended.
  • HMRC will then reimburse up to 80% of the furloughed worker’s wage costs, to a cap of £2500 per month.
  • If the worker is a highly paid employee, topping up their salary to the full amount could mean paying a lot more than 20% on top.
  • We believe the wage costs include employee’s tax & NI and pension contributions.
  • The individual cannot insist on becoming a Furloughed Worker, this has to be offered by the employer, although there would be nothing wrong with the employee asking the employer to agree to designate them as a furloughed worker .

This is what we do not yet know:

  • Whether this is solely for employees or whether will it cover workers too
  • If it does cover workers, the mechanism to be used to work up earnings to be paid
  • Whether the maximum capped salary is £2500 per month and the individual gets 80% of that, or whether the 80% is £2500, thus giving a maximum capped salary of £3125 per month
  • The specific criteria for an employer to trigger the payments
  • Whether it will be flexible enough to recognise short periods of being furloughed – even just a day
  • How it works with current redundancy consultation exercises triggered by the Covid-19 crisis or any other redundancy exercises
  • How it will work for those who have already lost their job or been laid off due to the crisis, although the fact that it is to be backdated to 1 March would suggest that an employer can rehire employees and put them immediately on furlough.
  • Whether it could be used to assist those individuals who are currently on indefinite unpaid dependent’s leave due to school closures, should an employer otherwise have needed to lay staff off
  • Likewise, those with underlying health conditions who, it is reported, will shortly be receiving notification that they must self-isolate for 12 weeks (if they cannot work from home).
  • And those on sick leave and in receipt of SSP

You may wish to read further about the Coronavirus Job Retention Scheme or check out your eligibility with our easy to use CJRS Flowchart

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