What is the furloughed workers scheme?

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Financial support for “furloughed workers” will be provided to employers through the ‘Coronavirus Job Retention Scheme’.

This scheme is available to all employers who have a PAYE payroll scheme in place as at 28 February 2020. Workers that can be furloughed include:

  • Full and part-time employees on the payroll as at 28 February 2020
  • those who do casual work or are on flexible contracts
  • those who have zero-hours contracts

Employees need to be on the payroll as at 28 February 2020 to be eligible for furlough, you cannot use the scheme to furlough new joiners. Employees hired after 28 February 2020 cannot be furloughed or claimed for under this scheme.

Eligibility 

To be eligible for the scheme, you will need to:

  • select and tell (‘designate’) your employees that they will be furloughed
  • keep your employees on the payroll
  • make sure any furloughs last at least 3 weeks, the minimum period under the scheme.

What if someone was made redundant on or after 28 February 2020

You can decide to rehire them and put them on the furloughed workers scheme instead.

What if my employee has more than one job

Each job is treated separately. This means your employee may be able to either:

  • continue to work for you and be placed on furlough for the other job, or vice versa
  • be furloughed for both jobs

If they are furloughed for both jobs, they will be eligible for financial support for each job.

Selecting and telling your employees

You must select your employees for furlough in a fair way to avoid any discrimination.  Workers who cannot work from home and who currently have no work to do will be the obvious candidates for furloughing.  You may need to consider a process of calling for volunteers, pooling and selection – as with a redundancy process.  You need to make sure the process is fair and does not discriminate.

You will need to get agreement from your employees to do this, unless there is a clause in the employment contract that allows you to lay staff off temporarily. You will need to clearly explain how much your employee will get paid in total whilst on furlough.

If you need a template letter please get in touch and we can send you one.

The government will pay you 80% of your employees’ wages whilst they are furloughed. You can decide to top up the wages to 100%, but you do not have to. If you decide not to top up the wages, you should tell the employee that this is the case and explain why not.

Employees cannot do any work for you whilst they are on furlough. They can do volunteer work, or training providing this does not provide services or generate revenue.

A furloughed employee can return to work and be placed on furlough again later, if needed.

If an employee disagrees with your decision, they'll need to talk to you and try to come to an agreement.

Changing an employment contract

If you cannot reach an agreement, you may need to change the written terms in an employee’s contract and you should seek appropriate legal advice before doing so.

If more than 20 employees are to be furloughed then you will need to consult staff or other union representatives before placing employees on furlough.

Furlough agreements

Any furlough agreements should be in writing. It's a good idea to include:

  • the date furlough starts
  • how much the person will be paid
  • when it will be reviewed
  • how to keep in contact during the furlough period.

How much can I claim?

HM Revenue & Customs (HMRC) will reimburse 80% of furloughed workers’ usual wage costs, up to a cap of £2,500 (gross) per worker per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

Fees, commission and bonuses are excluded and cannot be claimed.

For salaried employees, you must use the actual salary before tax, as of 28 February.

For employees whose pay varies (for example because they work shifts or irregular hours) you can claim for the higher of:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019-20 year

If an employee with variable pay has been employed for less than a year, you can claim for an average of their monthly earnings since they started working for you. If the worker only started in February 2020, you should use a pro-rata of their earning so far.

What if the subsidy is less than the minimum wage? Do we have to top it up?

No, you only need to ensure that workers receive the National Minimum Wage/National Living Wage for the hours that they actually work for you.  You do not need to ensure that the received NMW/NLW when on furlough.

However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

Tax Treatment of the Coronavirus Job Retention Grant

Payments received by a business under the scheme are made to offset tax deductible wages costs. They must therefore be included as income in your taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Tax free payment that could help with the extra costs of working from home

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Employers who require their employees to work from home as a result of the temporary closure of their business premises due to the Coronavirus can provide a tax-free payment as a means of offsetting reasonable additional household expenses.

The payment, which was increased to £6 per week – or £26 per month – from 6 April, in the March Budget, can be paid to workers in addition to their salary, free from income tax and national insurance.

It is up to your employer to decide whether to make the payment. If they don’t, you may be able to claim tax relief from HMRC on the additional household costs of your home office, provided you keep records of these costs and can prove to HMRC that they were ‘wholly, exclusively and necessarily’ in the performance of your work.

While I expect this situation to be temporary, the extra £6 per week payable to employees in addition to their regular salary payments would be a welcome boost, particularly for those on lower incomes, to help them offset some of the additional costs associated with working from home.

If you are currently working from home due to the closure of your employer’s premises, why not ask them if they would be willing to pay you the additional £26 per month whilst working from home?

Coronavirus – what help is available to me?

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If you are self-employed

See our article here about help under the Self-employed Income Support Scheme.

If you work in the gig economy

Unless it has been agreed as part of your contract, it is unlikely that you will be entitled to Statutory Sick Pay, sick leave or paid holiday leave.

Some employers have said they will offer sick pay if you have to self isolate because of coronavirus. Others have said they might offer some kind of compensation if you have been diagnosed with coronavirus.

If you’re working in the gig economy, check with the company to find out what your rights are.

You will be able to claim sickness benefits available to self-employed people if you’re eligible.

If you’re employed

The government has announced it will pay your wages through the coronavirus job retention scheme if your employer is forced to temporarily close because of coronavirus.

This will be available to anyone on the PAYE scheme and your employer will need to contact HMRC to apply. In order for you to qualify, your employer will have to re-assign your employment status as a 'furloughed worker’.

The scheme will pay 80 percent of retained workers’ salaries, up to £2,500 a month, plus the associated employer National Insurance Contributions and minimum automatic enrolment employer pension contributions on that wage. Your employer can top up your salary to more than this if they choose to.

Wages under the scheme can be backdated to 1 March, if you stopped working then, and the scheme will be open for at least three months. There is no limit on the amount of funding or the number of employees that can be furloughed.

The first of the grants are hoped to be paid before the end of April so it could take a few weeks to get your money.

If you have already been told your job is gone, you should contact your employer to see if they are now willing to take you back on and reassign you as a furloughed worker.

If you have already made a claim for benefits contact the relevant benefit helpline for advice on what to do before you cancel your claim. 

Employment and Suppot Allowance (ESA)

You can apply for ESA if you are employed, unemployed or self employed.

Most new claims will be for the 'new style' ESA.  To get this 'new style' ESA you need to have worked as an employee, been self employed and paid sufficient National Insurance in the previous 2 - 3 years.  National Insurance credits also count, so if you have claimed Child Benefit or Tax Credits, you may be eligable.

Your partners income and savings will not affect how much 'new style' ESA you are paid.

ESA is taxable and counted as social security income for Tax Credits

You cannot get 'new style' ESA if you are getting Statutory Sick Pay (SSP) from your employer.  You can apply for 'new style' EA for upto 3 months before your SSP ends and you will start to receive ESA payments when your SSP ends.

You can get Universal Credit (UC) at the same time or instead of ESA, but it ESA is counted in full as unearned income for UC purposes.

You can apply for ESA if you are below state pension age and have a disability or health conition that affects how much you can work.  You can apply for ESA if you are working, unemployed or self empolyed.  There are conditions to working whilst claiming ESA.

You cannot get ESA at the same time as claiming:-

  • Statutory Sick Pay (SSP)
  • Statutory Maternity Pay (SMP)
  • Jobseekers Allowance

For more information and to check eligability click here.

If you don’t want to go into work because of coronavirus

If you don’t want to travel or go into work because you are  worried about catching coronavirus your rights are more limited. Employers are required to listen to your concerns and try and find a way to work around them. You might also be able to take the time off as holiday or unpaid leave.  Your employer may also be able to set you up to work from home.

Am I entitled to sick pay?

Your rights to Statutory Sick Pay (SSP) depend on your employment status and earnings, see below for the various options.

  • If you’re an employee and earn more than £118 a week

If you’re an employee and earn at least £118 a week (£120 from 6 April 2020), you will be able to get £94.25 per week (£95.85 from 6 April 2020) for up to 28 weeks. The government has announced SSP will be paid from the first day you are off sick if it is related to coronavirus.

SSP covers you both if you’re ill and if you need to self isolate because you have been in direct contact with the virus. You will still need to provide a sick note or fit note. You no longer have to go to a doctor to get a sick note or fit note. You can get one by calling NHS 111.

Some employers have more generous contractual sick pay schemes, which menas that they will pay you either full pay or reduced pay for your period of illness. It is worth checking your contract, staff handbook or directly with your employer.

The government has said that it will bear the costs of SSP for small employers, so claiming it should not be a problem. If you do have a problem, contact the HM Revenue and Customs statutory payment dispute team:

Telephone: 03000 560 630
Monday to Thursday 8.30am to 5pm
Friday 8.30am to 4.30pm

Textphone: 0300 200 3212
Monday to Friday 8am to 5pm

  • If you’re an employee and earn less than £118 a week

If you’re employed but your earnings are too low to claim SSP, you may be able to claim Universal Credit. You can do this online here.

Don’t delay making a claim for benefits, even if you think you might have been affected by coronavirus.

However, if you are already getting any of these benefits, which are being replaced by Universal Credit:

  • Housing Benefit
  • Tax Credits
  • Income Support
  • Employment and Support Allowance

and need to make a new claim for Universal Credit because of coronavirus, check with the Citizens Advice Help to Claim service as soon as possible to find out how they might be affected and to get advice about your situation.  Making a new claim for Universal Creit could mean that your existing benefits are reduced, so make sure you take advice first.

If you run your own business

The government has said they will fund the costs of Statutory Sick Pay (SSP) for employers with workforces of 250 people or fewer for up to 14 days.

You can also apply to HMRC for a grant to cover up to 80% your employees’ salaries, up to £2,500 a month, providing that you have designated them a 'furloughed worker'.

The government has announced grants and business rates support for small and medium sized business too.

Banks will also be offering loans to small and medium sized businesses under the governments Coronavirus Business Interruption Loan scheme.

If you’re registered for VAT, the government has announced VAT payments due between 20 March 2020 and the end of June 2020 have been deferred.  They will need to be paid by the end of the financial year, however.

The government has announced the next Self Assessment tax return payment – due on 31July – has been deffered until January 2021 and you won’t be charged any penalties or interest for late payment during this period.

HMRC has expanded its Time to Pay Scheme if you are struggling financially because of anything to do with coronavirus and you owe outstanding tax.

If you already have missed a payment or are worried you will miss your next payment, call the HMRC Time to Pay helpline on 0800 0159.

If you’re business is struggling from the impact of coronavirus, then you can call Business Debtline on 0800 197 6026.

If you can’t work because you have to look after someone with coronavirus

You are entitled to time off work if you have to help a child or close relative who has coronavirus, has to self-isolate or needs to go into hospital. This person does not have to live with you.

This also applies if you need to take time off to look after children or arrange childcare because their school has been forced to close.

You have no statutory right to pay during this time, but employers might offer support depending on your contract and workplace policies.  Talk to your employer to see what they can do to help.

The amounts of time you take off must be reasonable for the situation and you might have to use any unused paid holiday first.

If your partner or relative who lives with you gets coronavirus, or has symptoms, they might be able to claim Statutory Sick Pay (SSP).

If your child’s school has closed

Schools across the UK have closed to everyone apart from for the children of key workers. This might be a difficult time for parents, but there are options available to you.

You are entitled to take time off to care for a dependent child. There are no rules around how much time you can take off and you should talk to your employer about your options.

You might also be able to take time off as holiday leave.

If you’re worried about childcare costs

If your hours have been reduced, your income has gone down, you might be worried about how this will affect any help you get towards childcare costs.

With the lockdown in place and some childcare providers closing temporarily, you might also be concerned if you’ve paid in advance to retain your child’s place, or if your childcare needs have stopped completely.

If you claim through the tax-free childcare scheme, this is usually based on a three-month period, so support will depend on when you next need to report your income.

If you’re getting the childcare costs element of Universal Credit, or getting help through tax credits, the number of hours you’re now working and your income can affect how much help you get towards childcare costs.

If you’re getting free school meals

Schools are making provisions to provide meals and food parcels to everyone who is eligible for free school meals.

How this is happening depends on the school your child is attending and where in the country you live.

If you live in England visit the Gov.uk website.

In Wales visit the Gov.wales website.

In Scotland visit the Mygov.scot website.

In Northern Ireland visit the NI Direct website.

If you’re worried about losing your job

The government grants, which allow your employer to cover up to 80 percent of your salary up to £2,500 a month, should minimise the risk of losing your job.  Ask your employer if they could place you on furlough instead of making you redundant, this would mean you could still get 80% of your salary.

Lay-offs and reduced hours

If you’ve been asked to take unpaid leave, and your contract allows you to be unpaid during this period, you might be able to claim Guarantee Pay.

You might also be able to claim new-style Jobseekers Allowance and, if you need help with other costs, Universal Credit.

Benefit changes because of coronavirus

The Universal Credit standard allowance and working tax credit basic element will both be increased by up to £1,040 a year for 12 months.

This will be available to new and existing claimants regardless of whether you’re employed, self-employed or a job seeker.

The amount you will get depends on your circumstances including household income and savings.  You will not beable to claim Universal credit if you have more than £16,000 in capital.

If you’re self-employed, the minimum income floor for Universal Credit will be temporarily abolished from 6 April 2020, meaning that most self employed people should be able to claim.

The Local Housing Allowance will increase and some people may get more money to cover their housing costs to cover the costs of the bottom 30 percent of rental properties in your area.

If you’re claiming Universal Credit and are not able to work or attend interviews at the jobcentre because of coronavirus, it’s important you contact your work coach by phone or through your online journal as soon as possible.

 

 

 

Covid-19 support for the self-employed

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Being self-employed means that you are not entitled to Statutory Sick Pay (SSP).

In last weeks budget the Chancellor of the Exchequer announced that any self-employed person who is affected by Covid-19 or self isolating will be eligable for Employment and Support Allowance (ESA) from day one of sickeness, rather than waiting until day 8.

If you are over 25 and eligable ESA is payable at a rate of £73.10 per week.

More details and how to claim can be found here https://www.gov.uk/employment-support-allowance