Financial help for employees during the Coronavirus pandemic
The UK Government announced a support package for employees, which their companies can apply for.
On 12 May 2020, the Chancellor announced a four-month extension to the furlough scheme to support employees until the end of October. The final day that employers can place employees on furlough is 10 June.
From 1 July, flexible furloughing will be introduced, whereby employees will be able to work part time and be furloughed part-time. From 1 August, employers will have to pay National Insurance and pension contributions, and not claim this through the CJRS.
From 1 September, the government will only reimburse 70% of an employee’s salary (up to £2,190 a month) and employers must top up at least a further 10% to reach 80% pay. From 1 October, the government will only reimburse 60% of an employee’s salary (up to £1,875 a month) and employers must top up at least a further 20% to reach 80% pay.
The self-employed grant is being extended and applications open in August for a second and final grant of 70% of average earnings up to £6,750 in total.
Am I eligible for the Employee Job Retention Scheme?
- The scheme is open to all UK employers who originally had a PAYE scheme in place on 28 February 2020. This has since been extended to the 19th March 2020. If you were employed after this date, you are not eligible.
- Any organisation with employees can apply. If your employer hasn’t done so yet and your job looks as though it could be at risk, you can ask them to do so. Even if you have already been laid off, they can reinstate you and apply retrospectively.
- Your employer can reclaim up to 80% of your wage costs, up to a cap of £2,500 per month, plus (not including) the associated employer National Insurance Contributions (NICs) and minimum auto-enrolment pension contributions on that wage. Any fees, commissions and bonuses are not included.
- If able to do so, your employer can choose to top up your wages to 100% but they do not have to (subject to employment law and renegotiating any contractual entitlements).
- If your pay varies, your employer can claim for the higher of either the same month’s earning from the previous year (for example, earnings from March 2019); or your average monthly earnings in the 2019-20 tax year.
- The scheme covers full-time and part-time employees, employees on agency contracts and employees on flexible or zero-hours contracts.
- You will be put on ‘Furlough leave’ and will be unable to work for the agreed period of time.
Who won’t qualify for Furlough leave?
- Employees on sick pay or self-isolating cannot be furloughed but can be furloughed afterwards.
- Employees on maternity (or similar) leave can continue to draw Statutory Maternity Pay (SMP) (or similar) payments. The 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.
What happens when I’m on Furlough leave?
- Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding.
- Furlough leave can be rotated amongst employees, provided each employee is off for a period of at least three weeks.
- You must not work at all during this time, even for an hour, in order to be eligible. However, you are able to undertake training and do volunteer work, provided you do not provide services to or make any money for your employer.
- When agreeing changes in hours (and acceptance of 80% pay), assuming the contract does not already allow for that, normal employment law applies.
- Your employer can only claim once every three weeks; that is, they cannot get weekly reimbursement. Claims can be backdated to 1st March 2020.
Further details can be found at: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
I’m an employer – how can I support my employees on Furlough leave?
While on Furlough, employees can get up to 80% of their salary, up to a monthly cap of £2,500. In addition to this, there are a few measures that individuals can take to maintain their financial wellbeing, like completing a monthly budget planner, saving on bills and subscriptions and having access to free debt advice, should they need it.
Download our guide on supporting employee’s financial wellbeing while on furlough leave and send this to your employees. If you need any additional support or information, please contact our Partnership Team for further content.
DOWNLOAD: PayPlan financial wellbeing for employees on furlough guide