COVID-19 HR & Staffing

French Duncan


 

Full details of how we can help you around COVID-19 / Coronavirus is available on our special page (www.frenchduncan.co.uk/covid-19) which you can access by clicking here, which now includes a set of Furlough Template documents for FREE DOWNLOAD. We will be keeping all our information updated as things progress and schemes are clarified, so please check back regularly, or follow us on Twitter or LinkedIn to keep informed of all the changes. 

COVID-19 / Coronavirus Job Retention Scheme

Written Sunday 22 March, updated at 9am Wednesday 13th May. If you read the blog before that date, please review again as many details have now been clarified by the Government.

The impact of COVID-19 on the world is beyond unprecedented in terms of the health and societal impact, alongside the stark challenges presented to business.

For the majority of companies in the UK, staff are their biggest asset but also their biggest cost. As the virus continues to rapidly spread across the UK, it is affecting people’s ability to attend work and the ability of business to operate, and with this there is a growing concern as to how to cover costs to survive.

In response, the Chancellor has set out a package of temporary measures to support companies through the severe cash flow issues they face. As part of this, on 20 March 2020 the government announced support to employers to temporarily pay part of their salary costs. We have set out below the current information relating to this, and will continue to update this as detail emerges.

 

The word ‘furlough’ – why’s it important and what does it mean?

The dictionary definition of furlough is a “leave of absence”. Furlough is a not a legal definition in the UK or commonly used in employment law, but the government intend to use this terminology in relation to what they are calling the Coronavirus Job Retention Scheme.

The basic principle of this scheme is that employers will be able to access this support to continue paying their ‘furloughed’ employee’s salary in part as an alternative to either lay off or redundancy.

 

Our 10 Step Guide to Furloughing Employees

We have created a 10 step guide to support you in the practical steps of how to furlough your employees under the Coronavirus Job Retention Scheme.

Step 1: Understand what you can claim

All UK businesses (of any size and in any sector) will be eligible to access this scheme, providing they have:

  • created and started a PAYE payroll scheme on or before 19 March 2020;
  • Enrolled for PAYE online
  • A UK bank account

Simply put, you can claim the lower of 80% of an employee’s regular wage or £2,500 per month. You can also claim the associated Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions.

Step 2: Determine whether you have sufficient cash flow to furlough staff

The funding available from government to support employers through the current crisis is unprecedented. The HMRC portal went live on 20 April 2020 with payments being made within 6 days, but it is anticipated that a large proportion of employers will be accessing this which could cause capacity issues.
Bearing this in mind, employers considering furlough need to forecast whether they have sufficient cash flow to retain and pay their employees on the payroll until they receive their grant claim. If there is not sufficient cash flow, other options such as lay off or unpaid leave may need to be considered.

Step 3: Designate the employee(s) as ‘furloughed workers’

The employees an organisation are able to furlough will vary. Within leisure, hospitality and non-essential retail, all employees could be furloughed whilst the business is temporarily closed. For other organisations where staff can work remotely, they may be experiencing a downturn in work, and wish to operate a reduced staffing level – in this scenario, an operational review would be required.

The following points are important to bear in mind when considering designating staff as furloughed: 

You CAN:

  • Furlough employees who were on your PAYE payroll on or before 19 March 2020 – please note, you must have notified HMRC on an RTI submission by this date. This means that if you pay weekly, you will be able to include some of your March new starters in furlough arrangements, but if you have pay monthly, you will only be able to include February new starters;
  • Furlough employees who you made redundant or stopped working for you providing they were on your PAYE payroll as of 28 February 2020 providing you re-employ them;
  • Furlough employees who are ‘shielding’ and or have caring responsibilities as a result of the coronavirus; and
  • Furlough salaried company directors providing this is formally adopted as a decision of the company and noted in the company records. The director can continue to carry out statutory obligations but they cannot do anything which could generate revenue or provide services to or on behalf of the company.

You CANNOT:

  • Have a furloughed employee cannot undertake any work during this period, and therefore this is not open to staff on reduced hours;
  • Furlough an employee who was not on the PAYE payroll on or before 19 March 2020 – in order to qualify for the grant, your employee must have been notified to HMRC in an RTI submission by 19 March 2020; and
  • Furlough employees where you receive public funding for staff costs.

Step 4: Notify the employee(s) they have been identified as furloughed 

The government guidance states you MUST do this in writing and retain this documentation for 5 years.   Please download our FREE TEMPLATES by clicking here.

Whilst on furlough leave, employees CAN:

  • Continue to work for a second whilst furloughed by you, and they can be furloughed by that employer also;
  • Start work with a new employer if you are in agreement with this – they should ensure their new employer arranges for them to complete an HMRC starter declaration and they should choose Statement C (i.e. they have another job);
  • Volunteer for another organisation; and
  • Undertake training (you should pay for this for staff on the national minimum wage).

Step 5: Agree with employee(s) to reduce their pay by 20%

Some employers may be in a position to ‘top-up’ the additional 20%, but it is anticipated many will need to reduce employee pay to 80% and you will need to agree this with employees, along with their consent to be furloughed. This should be agreed with the employee and documented – again please see our FREE TEMPLATES for advised wording.

Step 6: Process any pay amendments through payroll

If you are reducing pay, you should ensure you update your payroll system or your outsourced payroll provider of the employees who are furloughed.

You CAN claim:

  • Regular wages; and
  • Employer National Insurance and minimum automatic pension contributions up to the 80%; and
  • Non-discretionary overtime, fees or commission payments and piece rate payments.

You CANNOT claim:

  • Payments that are at the discretion of the employer, including tips, discretionary bonuses, commission payments; or
  • Non-cash payments; or
  • Non-monetary benefits such as a company car or salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay.

To support you with what you can claim through the job retention scheme:

Please note, where you are processing employee’s on the National Living Wage or National Minimum Wage, it is acceptable for them to be paid less than the current rates where you apply the 80% because they are not carrying out work whilst furloughed. The only exception is where they undertake training for you, they should be paid for this as normal as detailed above.

Processing payroll for furloughed employees, and then making the appropriate HMRC claim, can be complicated.  If you require assistance, please contact our Head of Payroll Linda Kelly.

Step 7: Keep your plans under review

The scheme in its current format is due to run until the end of July 2020, at which point we expect some changes to take place (from 1st August) with the scheme then continuing until 31st October 2020. Quite what those changes are exactly we do not yet know; the UK Government has stated that employers will (from 1st August) be able to bring back employees part-time with a combination of CJRS and the company covering wages. In order to qualify for the grant, your employees must be furloughed for a minimum of 3 weeks so we would suggest reviewing operations and developments in line with this and making adjustments accordingly. 

Please note, you can furlough employees multiple times providing each instance is for a minimum of 3 consecutive weeks.  This could be beneficial for employers who wish to rotate staff to maintain a skeleton operation. 

Step 8: Keep in touch with your employees

Whilst your employees cannot work for you in any way whilst they are furloughed, it is advisable to keep in touch with them regularly and in particular where there are developments, such as if restrictions are lifted allowing you to open your premises.

Step 9: Making your claim

You will make your claim via an HMRC portal from 20 April 2020.  Please see our specific page on How To Make A Claim Under the Coronavirus Job Retention Scheme for further details on this or go to the following link to make your claim https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme

Step 10: Review your future requirements

The government has said that the scheme will be in place as long as it is needed. The impact of the crisis on business is likely to be long lasting - returning to normality, even when restrictions are lifted, will not be overnight. With this in mind, businesses should ensure they are conscious of what they need going forward to maintain business critical functions. This may require streamlining your activities and considering reducing your headcount.

 

Update from Tuesday 12th May 2020:

Chancellor Rishi Sunak provided an update to the nation in regards to the future of the Coronavirus Job Retention Scheme. It has been confirmed that the UK Government’s furlough scheme will be extended by a further 4 months until the end of October 2020.  The purpose of this extension is to avoid inevitable mass redundancies across the UK.

The scheme in its current format (80% contribution to those staff placed on a period of furlough) will continue to run until the end of July 2020.  Thereafter, it has been suggested there will be some changes to take place from 1st August 2020 with the scheme then continuing until 31st October 2020.

Quite what those changes will be is not yet clear.  The UK Government have outlined that employers will be expected to contribute to the costs of the scheme and this means employees will be able to return to work on a part-time basis.  The additional details around how this will work will likely be released by the end of this month – we will provide further updates as further information emerges.

 

How French Duncan can help

The French Duncan HR team are on hand to help you in implementing furlough and other measures to survive the current crisis. 

If you would like to arrange a free telephone consultation with our HR team or discuss resources available, please contact 0141 221 2984 and we will direct you to our team.

Points of contact:

 

Further Information

For more information on the various others issues and assistance available around COVID-19 / Coronavirus, please visit https://www.frenchduncan.co.uk/covid-19/, which now includes some FREE TEMPLATES for Furloughing staff.

You may also wish to read our specific page on How To Make A Claim Under the Coronavirus Job Retention Scheme.

Here you will also find information HMRC deferralsbusiness loans including Coronavirus Business Interruption Loan Scheme (“CBILS”), personal tax & self-assessmentdebt assistance & restructuring and much more. You can also find contact details of the key staff able to help you further. 

 

 

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