20 Apr 2020

Employment

Job Retention Scheme: Extension of the Furlough Scheme until June 2020

The Government has announced an extension of the furlough scheme until the end of June 2020. This provides certainty for employers and means millions of employees will remain in employment. However, employers will no doubt be planning significant re-structuring will be required once the furlough scheme comes to an end.

The Scheme goes live from today and the Government has published a step by step guide to making claims. Further information in relation to the scheme can be found by clicking here

A recap on some key information relating to Covid-19 and the Job Retention Scheme is shown below.

What is the purpose of the Coronavirus Job Retention Scheme (JRS)?

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 coronavirus (COVID-19).

Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month (for employees earning over £3125 a month), plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on the wage being paid. Employers can use this scheme anytime during this period.

Which employers are eligible to access the scheme?

Any UK organisation with employees can apply, including:

  • Businesses – companies/ firms/ sole traders
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities – but see section below.

You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.

Public sector organisations

The government expects that the scheme will not be used by many public sector organisations, as the majority of public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.

Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.

Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.

In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.

Who can be furloughed?

The issue of employment status was confusing in the government’s original guidance, with references to employees and workers being used interchangeably.  In addition, the government has now confirmed that the JRS will support any individuals who are engaged through the PAYE system, regardless of their employment contract. This means workers who are paid through PAYE will be covered, including those on zero-hour contracts or other flexible contracts. For ease, this note uses the term employee to refer to all those who are paid via PAYE.

Require further guidance? Get in touch…

Employers should continue to monitor Government guidance for updates. Should you require any further guidance or assistance with advice on issues relating to Coronavirus please do not hesitate to contact our Head of Employment Daniel Wilde on 01633 244233, who can provide bespoke advice tailored to the needs of your business.

 

 

 

 

 

 

 

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