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Update on claiming wages for employees who are furloughed

The Government has now provided further guidance on the Coronavirus Job Retention Scheme (CJRS) and how employers can claim wages for those employees who are furloughed.

Our specialist employment solicitor, Lisa Aitken has set out below, the main questions she has been asked relating to the scheme.

Q:  How does the scheme work?

A:  The scheme was set up to support employers who have been severely affected by Covid-19 to protect jobs by making an employee “furloughed” rather than making redundancies.

Employers are able to apply to HMRC for a grant to cover 80% of a furloughed employee’s usual monthly wage costs up to £2,500 a month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.  The scheme is open from 1 March 2020 for a period of 3 months and employers can use this scheme anytime during this period.  Fees, commission and bonusses are not included.

Q:  How do I know which employees can be furloughed?

A:  The scheme applies to full-time employees, part-time employees, employees on agency contracts and employees on flexible or zero-hours contracts.  It applies to all affected employees on PAYE on or before 28th February 2020 who are furloughed, instead of being laid off.  The scheme also covers employees who were made redundant since 28th February 2020 if they are rehired by their employer.

Q:  How long must employees be furloughed?

A:  Employees must be furloughed for a minimum of 3 weeks at a time.

Q:  Can employees who are on reduced hours or working for reduced pay still be eligible?

A:  No, they will not be eligible – the employer will have to continue paying through the payroll.

Q:  How do employers calculate the wage costs of employees who work variable hours?

A:  If the employee has been employed for a full 12 months prior to the claim, the employer can claim for the higher of either (a) the same month’s earning from the previous year; (b) average monthly earnings from the 2019-20 tax year.  If the employee has been employed for less than a year, an average of the employee’s monthly earnings since they started work can be claimed.

Q:  Will employers have to repay the grant payments?

A:  No, it is not a loan.

Q:  How do you apply for the Job Retention  Scheme grant?

A:  HMRC have created an online portal however it isn’t available yet. This is expected to be available by the end of April 2020.

Q:  Can a furloughed employee do voluntary work?

A:  A furloughed employee can take part in volunteer work or training as long as it does not provide services to or generate revenue for your organisation.  However, if workers are required to complete online training courses while they are furloughed, then they must be paid at lease the NLW/NMW for the time spent training, even if this is more than 80% of their wage that will be subsidised.

Q:  Can employees who are on sick leave or self-isolating be furloughed?

A:  No, but they can be furloughed when they are fit to return to work.  Employees who are shielding in line with public health guidance can be placed on furlough.

Q:  What about employees on maternity leave?

A:  Employees on maternity leave can continue to receive statutory maternity pay.  The most recent guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed or electing to change to shared parental leave and then being furloughed.

The employment guidance is constantly being updated and as soon as legislation is published, we will continue to post updates on our website. 

If you have another question that hasn’t been covered above, please call Lisa Aitken on 07960 469988 or email: for advice.

For further details of the CJRS please click here

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