Updated 23 March 2020
Updated – 27 March 2020
The following is Ward Williams understanding of this policy and how this will work based on the information published so far, including the updated guidance provided by the Government on the evening of Thursday 26 March 2020. This information should not be solely relied on for advice at this stage but is intended to give an indication of how the scheme should work. You should contact your usual Ward Williams partner for further details where required.
Rules as outlined in official statements so far:
- Furloughed
members of staff must not work for the employer during the
period of furlough. Furloughed workers are able to undertake training and/or do
volunteer work, provided they are not paid. If furloughed workers have a
separate job with another employer, this job is unaffected and they will be
able to work for this separate employer. - Furlough
applies from 1 March 2020, so can be backdated. It will last for at least 3
months and will be extended if required. While the scheme is backdated to the
beginning of March, a company will only be eligible to claim the grant once
they have agreed the furlough with their staff and staff have stopped working
for the employer. This will of course be subject to employment law in the
usual way. - Furlough
leave must be taken in blocks of 3 weeks. There is nothing in the guidance
which prohibits rotating furloughed leave but each furloughed worker must be
off for a period of at least 3 weeks. - It is
available to employees who were on the payroll on 28 February 2020.
If employees were not on the payroll at this date, they will not qualify.
Anybody who was on the payroll on 28 February 2020 and has since been made
redundant can be rehired and put on the scheme - All
UK businesses are eligible: any
employer on the country, small or large, charitable or non-profit’. A PAYE
scheme must have been in place on 28 February 2020. - The
scheme pays a grant (not a loan) to the employer. Employers can only claim once
every three weeks i.e. they cannot get weekly reimbursements. - The
employer will pay the employee through payroll, using the Real Time Information
(RTI) system as usual, as required by the employment contract. This contract
may be renegotiated but that is a matter for employment law. So RTI system
reporting of payroll will continue as normal, with Income Tax and National
Insurance deducted on the employee’s subsidised wage as normal. - The
scheme will be administered by HMRC: • Relevant employees must be designated as furloughed employees. • Employers
will submit information to HMRC through a new online portal. • As this portal
will take time to build (HMRC have mentioned a date of end of April 2020 for
the scheme to be operational), businesses should look to the Coronavirus Business Interruption Loan Scheme to
support cash flow in the meantime. - Maximum
grant will be calculated per employee and is the lower of 80% of an
employee’s regular ‘wage’ or £2,500 per month plus the associated
Employer National Insurance
contributions and minimum automatic enrolment employer pension contributions on
that subsidised wage. - For
full and part time employees, the actual salary before tax, as at 28 February
2020 should be used to calculate the 80%. Where employees receive pay which
varies, if they have been employed for a full year, employers will claim for
the higher of: • the amount that the employee earned in the same month last
year • an average of the employee’s monthly earnings from the last year. If the
employee has been employed for less than a year, employers will claim for an
average of the monthly earning since the employee started work. Bonuses, commissions and fees are not
included as part of monthly earnings. An employer can choose to top up this grant to 100% of an
employee’s “regular” wage but does not have to (subject to employment law and renegotiating any
contractual entitlements)
If you have concerns or questions, please contact the WW Creatives team. As further details are announced, we will keep you informed.
