The Job Retention Scheme, recently proposed by the government is great news for employers. Business owners were wondering how they were going to cope during the Coronavirus (Covid-19) pandemic.
The Job Retention Scheme
With the Job Retention Scheme, employers can put their employees on furlough. This is a temporary lay-off, meaning as soon as there is work available again staff can be asked to return to work as before.
The Government has confirmed it will provide grants to businesses. This will cover 80% of wage costs to a maximum of £2,500 per person per month.
So if you are wondering if this Job Retention Scheme could help you, I have answered a few of the frequently asked questions below:
Can I furlough part-time workers?
Yes. In fact, you can furlough all types of workers part-time, full time, employed agency, zero hours, variable hours. They will all be entitled to the Job Retention Scheme grant.
What is someone is on sick leave?
When someone is on sick leave they will continue to receive sick pay in accordance with their employment terms and conditions. If they are due to return, you can initiate a period of furlough on their return date.
Can I have rotate staff on furlough leave?
You can, but the minimum period for qualifying is three weeks, so you will need to rotate on a three-week cycle, any less and you will not receive the grant.
Can staff do a small amount of work for me whilst on a furlough period?
The government guidance stipulates that anyone on furlough is not permitted to carry out work for their employer or anyone else.
What if my employee has more than one job?
Employees who currently have more than one employer can be put on furlough by one employer and continue to work for the other. If they are put on furlough by more than one employer, they’ll receive separate payments from each employer. The 80% of their normal wage up to a £2,500 monthly cap applies to each job.
What if someone is on maternity leave?
An employee on maternity leave will continue to receive their maternity pay as before, no change. If they are due to start their maternity leave soon, they can be put on furlough, until the maternity leave starts. NOTE: If their earnings have reduced due to a period on furlough their Maternity Leave starting this may affect their Statutory Maternity Pay.
If someone is due to come back to work following maternity leave, you can initiate a period of furlough instead of returning to work.
I had a new recruit who started on during March, do they qualify?
Employers can only claim for staff who were employed on the 28th February and new starters since then do not qualify for the grant.
What about National Minimum wage?
Pay on furlough does not have to meet the national minimum wage because they are not being paid to work.
How is the 80% payment calculated?
For full time and part-time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.
In the case of employees with variable pay, who have been employed for a full year, employers will claim for the higher of either: the amount the employee earned in the same month last year, or an average of their monthly earnings from the last year.
For staff on variable pay, who’ve been employed for less than a year, employers will claim an average of their monthly earnings since they started work.
Is the payment subject the tax and national insurance and pension?
Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employees will also pay automatic enrolment contributions on qualifying earnings, as usual.
Employers will be liable to pay Employer National Insurance contributions on wages paid as well as the usual pension contributions.
These are difficult times for employers and we are here to help employers. If you have any questions about the Job Retention Scheme or any other employment issue. Please do not hesitate to contact me.