How to Furlough
HOW TO FURLOUGH EMPLOYEES
- Furlough is when employers ask employees to take a temporary leave of absence due Coronavirus (COVID-19) but kept on the payroll.
- Affected employees will need to be designated as ‘furloughed workers’. Changing their status remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation (Employers may need to seek legal advice on the process);
- To be eligible, employees must be furloughed and cannot work. If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.
- Wages of furloughed employees will be subject to Income Tax and National Insurance as usual and run through payroll. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out;
HOW TO CLAIM CORONAVIRUS JOB RETENTION SCHEME
- If we run your payroll you must inform us of the date you agreed in writing to furlough your employees and the amount of the furlough pay:
- To claim Coronavirus Job Retention Scheme we would need to run a payroll and then submit information to HMRC via a new online portal, expected to be ready in April;
- We can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for.
- Claims can be backdated to 1 March if applicable, but will only be eligible to claim once the employee has been furloughed and stopped working;
- Once the claim has been approved, HMRC will pay it via BACS payment to a UK bank account. HMRC are working urgently to set up a system for reimbursement. The first set of payments are expected late-April 2020.