The Coronavirus Job Retention Scheme is a temporary scheme designed to support employers whose operations have been “severely affected” by the coronavirus pandemic and to protect employees who would have otherwise been laid off or made redundant as a result of the crisis.  Where employees are placed on furlough  (a leave of absence) the government will contribute to a proportion of their wage costs for this period.  

Furlough:  A Summary

  • Employers can use an online HMRC portal to claim reimbursement of 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated employer National Insurance contributions (NICs) and minimum automatic enrolment employer pension contributions on that wage.  
  • Employers can elect to top up to the employee’s full salary, although there is no obligation to do so. If they do – they will need to bear the costs of employer NICs and pension costs.
  • Employers do not need to wait until the portal is ready to put employees on furlough as claims can be backdated to 1 March 2020 if the employee has not been working.  The minimum period of furlough is three weeks. 
  • Employees cannot do any work for their employer whilst they are on furlough. 

5 practical points employers should think about:

  1. How to communicate with staff about furlough and whether agreement is required, for example if there is a change to terms and conditions
  2. Ensuring selection for furlough is not discriminatory
  3. What terms and conditions may continue to apply during furlough
  4. Whether furloughed employees should take accrued annual leave during furlough
  5. Ensuring that employees understand that the furlough remains subject to the government scheme and both the employee and employer being eligible to claim the grant

The scheme is open to all UK employers that had created and started a PAYE payroll scheme on or before 28 February 2020.

Further information on furlough is available from:

 https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Article written with assistance from Remy Ormesher, Trainee Solicitor