COVID-19: Job retention scheme guidance for UK employers

During the COVID-19 outbreak, the UK Government has announced a number of relief packages to help companies survive. One of these options was the announcement of the Coronavirus Job Retention Scheme.

The scheme is temporary and open to all UK employers starting from 1 March 2020. The scheme will last for at least three months before the Government will review it again. It is designed to support businesses that have been severely affected by COVID-19.

Employers can place employees on a leave of absence, known as ‘furlough’. During this time, employers can claim 80% of employees’ usual monthly wage costs, up to £2,500 a month. This also includes the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

The rules of the Coronavirus Job Retention Scheme

  • Furloughed staff must not work for the employer during this period,
  • A company will only be eligible to claim the grant once they have agreed to furlough their staff and the staff have stopped working for the company,
  • The scheme is available to all UK employers who had started a PAYE payroll scheme on 28 February 2020,
  • Any employer in the country, small or large, charitable or non-profit are eligible to use this scheme,
  • The scheme will pay a grant not a loan to the employer and it will be paid through a new online purpose-built system. More details about the application process can be found here
  • The company will pay the employee through payroll and report payments to HMRC using the RTI system as usual
  • The scheme must be administered by HMRC and the relevant employees designated as furloughed employees
  • The maximum grant per employee is 80% of an employee’s normal wage with a cap of £2,500 per month plus NIC and employer pension contribution

You can read more on this on our other post recently published here.

Employees on furlough

Once the employer has decided who to furlough, that employee must remain on furlough for a minimum of three weeks. However, the employer can place the individual on furlough more than once and/or for a longer period of time, while the scheme is open.

Employers must explain to the employee that they shouldn’t undertake any work for the company during this time. They can, however, undertake training or volunteer as long as they are not making money for the company or providing services to the company. The UK Government guidelines have also made it clear that companies can make an employee redundant while they are furloughed or afterward.

At Paul Beare, we are fully aware that these are difficult times for companies and their staff. We want to help you reduce the impact of COVID-19 on your business. Please don’t hesitate to contact us if you have any questions or require advice on certain topics.