The Coronavirus Job Retention Scheme, or Furlough Scheme, has been much talked about in the press and social media this week and so I’ve written a summary of key elements as they are, as of today’s date. Full guidance has been provided by the government at GOV.UK and they estimate that the scheme will be operational by the end of April.
Claim timetable
Eligible employers will only be able to submit a claim once every three weeks and claims can be backdated to 1 March 2020.
Sickness absence
Employees on sick leave or who are self isolating can’t be furloughed but can be afterwards.
Furlough activities
Furloughed emoloyees cannot undertake any work but can participate in training. They can also participate in volunteer work so long as it does not generate any income for their employer.
There is nothing stated in the guidance that prohibits rotation of furloughed employees so long as each employee is off for three weeks or longer.
Leave duration
Furlough leave must be taken in blocks of three weeks.
Eligible tenure
To be eligible employees must have been employed no later than 28 February 2020. Anyone who was employed later is not eligible.
Importantly those who were on the payroll on 28 February 2020 and have since been made redundant can be rehired and put on the scheme.
Variable pay
There are two means of calculating the pay if an employee’s pay varies – either the higher of (a) the value of earnings in the same month one year earlier; or (b) average monthly earnings in the 2019/20 tax year.
How much?
Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus the associated employer NICs and minimum autoenrolment pension contributions on that wage.
Fees, commissions and bonuses are not included.
Employers can choose to top up wages but are not obliged to do so.
The scheme is open to all employers who had a PAYE scheme in place on 28 February 2020.