The Government published another update to its employer and employee guidance on the Job Retention Scheme (the Scheme) during the evening of 9 April. The new guidance includes some important changes that affect the furloughing of employees who are ill, on sick leave or shielding. It also extends the Scheme to employees who are TUPE transferred after 28 February. The detailed Make UK FAQs are in the process of being updated, but in the meantime, here is a summary of the main changes to the guidance:
- Employees who are unable to work because they are shielding in line with public health guidance (or need to stay home with someone who is shielding) can be furloughed. The requirement that they need to have been at risk of redundancy in order to be eligible for furlough has been removed. This requirement was widely considered to be an error in the previous version of the guidance.
- Employees who are currently on long–term or short-term sick leave can be furloughed for business reasons. The individual should be classified as a furloughed employee and they will then receive furlough pay under the Scheme. The two week SSP rebate scheme is not available whilst an employee is furloughed, since the employer instead makes a claim for a contribution to salary costs via the Job Retention Scheme. Furloughing is not intended for short-term absences from work for sickness, since there is a three week minimum furlough period.
- If an employee becomes sick whilst furloughed, you can decide whether to keep them on their furlough rate or move them onto SSP. If the employee is moved onto SSP, the employer can no longer claim for the furloughed salary through the Scheme. Employers are required to pay SSP themselves, although some employers may qualify for a rebate for up to 2 weeks of SSP.
- Where a TUPE transfer has taken place after 28 February 2020, the new employer can furlough the TUPE’d employees.
- In addition, employees can be furloughed where the PAYE business succession rules apply to the change in ownership and where a group of companies have multiple PAYE schemes and have consolidated them into a new PAYE scheme after 28 February.
- The employer National Insurance Contributions and pension contributions that can be reclaimed are based on the furlough salary, not normal salary. Employers must pay all money received under the Scheme which relates to pension contributions to the pension scheme as an employer contribution. (Note that the Pensions Regulator has also published new guidance for employers about automatic enrolment and pension contributions in relation to issues that might arise from the current emergency).
- Overseas nationals working on all categories of visa can be furloughed, grants under the Scheme are not counted as ‘access to public funds’ which is generally prohibited under their visa conditions.
- The furlough pay for employees returning from family leave after 28 February 2020 should be calculated based on their salary, before tax, not the pay they received whilst on statutory leave. Claims for such returners who have variable pay should be calculated using either the same month’s earning from the previous year or average monthly earnings for the 2019-2020 tax year.
- The whole grant from the Scheme referable to the employee’s pay must be paid to an employee in the form of money. The grant cannot be used to pay for the provision of benefits or a salary sacrifice scheme, nor can you agree with employees to reduce the amount paid them, for example by charging an administration fee.
- There is more detail on the information must be included when claiming through the Scheme:
- employer PAYE reference number
- the number of employees being furloughed
- National Insurance numbers for the employees you want to furlough
- names of the employees you want to furlough
- Payroll/works number for the employees you want to furlough
- Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- bank account number and sort code
- contact name
- phone number.
We are expecting some updated guidance on holiday and furloughing to be published next week.
We will consider the impact of the latest guidance in more detail in our FAQs, which are currently being updated, and we recommend you read the updated version of these in addition to this summary.