COVID19 has created an uncertain time for all, across the globe, across industries, across businesses and across households. Within this concern, high volumes of common questions have been asked, with a focus on employment – as it stands, the Job Retention Scheme (furlough).

With this in mind, we’ve created a narrative of those FAQS, with the hope to shed some light on the current world of employment. This is an unprecedented time. Coronavirus has impacted our livelihoods. Your situation may deviate slightly from our narrative. Yet we hope our advice can help you personally keep safe, well and secure. Now is the time to support one another through available resources and funding. If you do require further information or guidance, as an employee or employer, please head over to the official Government website.

This information is based on guidance provided by the Government on Coronavirus and the support available for employees/employers, published up to 31st March 2020.

Update 03/06/2020:

Following the Chancellors announcement on Friday regarding the Coronavirus Job Retention Scheme (CJRS), we thought it would be useful to share with you the salient points. As we already know, the CJRS will remain in place until the end of October 2020, however the level of contribution will be slowly tapered to reflect that people will be returning to work.

June and July – The scheme remains unchanged.

August – The scheme will continue to pay out 80% of wages, but employers will no longer be able to reclaim the employers National Insurance and pension contributions.

September – The scheme will pay out 70% of furlough wages, with the employer contributing the remaining 10% (plus the NI and pension contributions mentioned above).

October – The scheme will pay out 60% of furlough wages, with the employer contributing the remaining 20% (plus the NI and pension contributions mentioned above).

To enable the introduction of part time furloughing, and support those already furloughed back to work, from the 1st July 2020, you can start to bring your employees back to work on a part time basis. You must pay them 100% of their pay for any days they work, and you cannot reclaim this, but the CJRS will cover the remaining days, where the employee will technically remain on furlough.

It is important to note that CJRS closes on the 30th June 2020 for any new furloughs, so you must have your employees on furlough by no later than 10th June 2020 in order to ensure they meet the 21-day qualifying criteria. Any employees furloughed after this date will not be eligible for the CJRS.

Update 12/05/2020: The government have announced the Coronavirus Job Retention Scheme (Furlough) has now been extended until October 31st 2020.

Update 09/04/2020: HMRC have recently announced that the online portal to claim payments for furloughed employees will be set live on Monday 20th April. The furlough scheme has been extended to the end fo June 2020.

I have a new employee, who unfortunately cannot start their contract as our company is now in lockdown. What support is available for employees/employers if employment arrangements have been made, starting after 19th March 2020? 

As it stands, this is an unfortunate situation to be placed within. As the employment contract for your new employee is set to start beyond the deadline of 19th March, the job retention scheme cannot be activated by you. For your company, there may be leeway to negotiate a reduced salary with your new employee, or to delay the start date. However, this will depend on your active employment contract and internal policies. We recommend sourcing further advice on this situation before acting.

For your new employee, if they left their old employer before 19th March, meaning they were not registered on their old employers’ payroll, the only available source of funding is through applying for Universal Credit. If they were fortunately registered, on the deadline, there is potential to ask for furlough for the time being. We are however hopeful that the Government will reconsider this gap in the job retention scheme for new employees.

How does the Job Retention Scheme work for companies who hire key workers? As a key working company, if we reach a point where furlough is required, due to COVID19, will we receive funding support from the Government? Or will the ‘no recourse to public funds’ activate?

The Government’s current aim is to ensure that all key workers and services are continuously available. Through the present-day guidelines, financial support for the furlough of key workers isn’t available. This is down to the efforts to ensure key workers are working and within employment to continue their services. Although this is the case for frontline staff, financial funding may be available for other areas of your business – with a focus on ‘non-essential workers’ or where roles cannot be transferred to necessary services.

If this is your current situation, we do advise sourcing further guidance. In short, your unique business situation may or may not result in funding.

Our workload has plummeted, meaning we do not have enough tasks to cover our workforce. Due to COVID19, what are the best next steps to consider? Reduced hours, redundancies or the Job Retention Scheme?

There unfortunately isn’t a one fits all answer, all depending on your business dynamic. In most cases, utilising the Government’s funding support through the Job Retention Scheme will be recommended. This will help you retain your employees for the post coronavirus responsibilities, while supporting them financially. However, this may not always be the best option for your company, depending on your employee’s skills and responsibilities. It is important that you look into your employment contracts before making any moves. This will help you identify whether reduced hours are possible through the coronavirus period. Please remember that financial support from the Government isn’t available if you do reduce hours or serve redundancies.

What is the eligibility to be classified as a business who is ‘unable to pay’ employees, meaning that furlough schemes can be used?

The best way to measure eligibility is by considering your ability to continue as a business, when judging financial health. Has coronavirus impacted your ability to trade? Are redundancies or lay-offs unavoidable? In this case, the Government will expect companies who cannot continue financially to make use of the Job Retention Scheme. However, if you are managing financially, where business is continuing, the Government asks all business owners to think morally before applying for support.

What is the definition of ‘businesses who are unable to pay’ when considering eligibility for the Job Retention Scheme?

This statement has now been removed from the Government’s guidelines. It considers that all companies are able to pay, through internal cash flow or through the furlough scheme. Please see the above FAQ for more information.

Before acting, do I need to communicate the action of furlough to my employees?

Before making any changes to employment, it is imperative that you do communicate your plan with your employees. Without communicating your decision to furlough employees, you will be breaching your employment contracts. Avoid potential employment claims by sharing your decision, which is non-discriminatory and in the best interest for the entire company – including your employees.

As the Job Retention Scheme is still under works, what are companies meant to do in the meantime?

We appreciate that this is difficult. Many companies will struggle, up until the funding is available. However, it is important to remember that you can apply as a company and that the financial support will soon be available. We recommend acting on your companies/employees’ best interest. Where possible, communicate furlough decisions with employees and keep them in the loop of your next steps.

Must I follow the 80% furlough pay rate for all employees, or can I pay senior/favoured employees more?

Treating employees differently through this difficult time may be perceived as discriminatory. We advise following the same pay strategy for all employees, to make this time fair for all. Please keep in mind that topping up your employees pay to 100% is your decision. This isn’t a necessity to be eligible for the furlough coronavirus scheme.

Do I hold the decision of which employees can continue working through the pandemic and which should be offered furlough?

This decision is completely up to you as an employer. As Coronavirus has impacted all workplaces differently, along with the current required skills to continue through this time, you can decide who should be furloughed. It’s important to remember that a certain skill sets or depth of knowledge may be advantageous to continue the trading of your company. This should be prioritised over employee favourability. Likewise, the safety of your employees should be observed when deciding.

It is advised that decisions are communicated to employees and also take into consideration their personal circumstances – for example, whether remote working is possible for them.

To help make this decision, please remember that furloughed employees can return after 3 weeks off or can continue to be placed on furlough for 3-week blocks.

I am already in the process of making employees redundant. Can I withdraw this decision and utilise the Job Retention Scheme instead?

As the Job Retention Scheme is in place to protect employees and also help companies continue as usual post coronavirus, the scheme is available to support companies where lay-offs or redundancies may be the only option. Legislation for furlough due to coronavirus is yet to be published. However, in this instance, it is imaginable that the Job Retention Scheme will be available.

If you’ve already made redundancies, yet only in the light of coronavirus, and your employees were working for you on 19th March 2020, you are able to switch over to furlough.

If I’ve already made employees redundant, can I revert this and transfer this over to the Job Retention Scheme?

If your employees were employed by you on 19th March 2020 and your intention was to keep your employees for when normality resumes, you can change over to the Job Retention Scheme. The scheme is in place to help companies retain their employees, while also ensuring that individuals are paid through this challenging time.

I sent my employees home on full pay from 1st March. Can I recoup the salary paid by opting for the furlough scheme?

If you have evidence that employment has been terminated or suspended from 1st March 2020, due to coronavirus, there is potential that you can source financial support to continue payments. Payments already made since 1st March will also count in this situation. For full eligibility, we recommend sourcing further information by the Government.

I am a company director. Can I make use of this financial support?

It’s firstly important to remember that dividends cannot be used as income in this situation. Only payments made through PAYE are classed as income. With this in mind, only 80% of your PAYE income will be considered. You will be notified when this scheme is available.

If you’re a director of a company, there is opportunity for you to be furloughed. However, in this instance, you will not be able to complete any work related to the business. As this will usually be difficult for many directors to complete, especially as many are looking to make improvements or changes for when the crisis has ended, this scheme may be valueless. It will be worth considering alternative sources of funding.

If working hours have been reduced, can 80% of a salary still be obtained through the Job Retention Scheme?

Under the Job Retention Scheme, all work should be stopped. With this in mind, no financial support will be provided for employers/employees where reduced hours have been implemented. Furlough is only available for those who are not working, due to coronavirus.

In total, I have 10 employees. I however only have enough work for 5 of those employees. What are my options through the coronavirus crisis?

If you do not have enough work to cover your entire workforce, there is potential to furlough 5 of your employees through the Job Retention Scheme. By following this process, you’ll have enough resources to continue your business, while also supporting your retained staff. It’s important to remember that the selection of furloughed employees should be completed fairly and also communicated before decisions are made.

Do I have to continue paying 100% of salaries? Or can I select to only pay the 80%, funded by the Government?

You do not have to make up the pay to 100% of your employee’s salary. This is optional, depending on the businesses ability to pay.

Can I alternate furloughed employees on a rota basis?

When an employee is furloughed, any involvement with work will stop. This is agreed when the initial furlough period is set. Although employees can return to work once the furloughed period has been completed, following 3-week blocks, a rota system for additional employees is not possible. We appreciate business demands can change quickly. However, in order to utilise the Job Retention Scheme, the outlined furlough periods must be adhered to.

I have employees who are set on a zero-hour contract. How are payments assessed for them?

Payments for zero-hour contracts will be based on the higher of pay for the corresponding week or month, in 2019. Alternatively, their average earnings over 2019-2020 can be used to gauge payments. Please be reassured that if employment started after April 2019, the current employment period will be used as the measurement tool.  

When will money be accessible for employers? If there is a delay, how can cash flow be managed up until payments are made?

Unfortunately, as there are still some gaps in the scheme and there is a large influx of interest, payments are set for no earlier than the end of April. In the meantime, companies are recommended to consider alternative payment resources to ease cash flow.

If you do require financial support through the scheme, it is advised that you apply as soon as possible through a new online portal, in conjunction with HMRC. Applications will then be reviewed where a few weeks can pass before payments are made. However, please have knowledge that the Government is attempting to work this efficiently, to benefit all.

If I start to pay my employees 100% furlough, can this be reduced overtime to 80%?

If payments are set to reduce, it is imperative that this is communicated to employees and that agreements are made. Without this step, you will be violating your contract and terms. If you believe that this is likely for the next few months, we recommend sharing this information with employees now, along with your justifications.

Through coronavirus, a number of different financial schemes are now available. Can I source financial support through all schemes?

Although there are a number of grants and loans available for employers, it is recommended that you look into each and their eligibility requirements. Although multiple avenues of financial support may be available, some may not be ideal or may contradict one another. We recommend visiting the Government website and reading the eligibility for each scheme.

I have an employee who is serving their notice. Can I make use of the furlough scheme for the remainder of their notice?

The aim of the furlough scheme is to support employees, while also helping employers retain staff for post coronavirus activity. With this in mind, if an employee is serving their notice, the scheme will not be available to you as an employer. It is imperative that in this case that you follow your notice period and payments, outlined in your employment contracts.

Can my furlough employees work for others through this period?

Through the furloughed period, your employees must not complete any work for your company. They can however work for others as no restrictions currently stand within the scheme. As an employer, you can outline whether employees can work for others, such as competitors while publishing furlough agreements. It’s also vital to make furloughed employees aware that they must be immediately available to return to work as and when required, following your furlough timeline and current restrictions of COVID19.

Can furloughed employees volunteer or work for charitable services?

There are no restrictions under the Job Retention Scheme. Furlough employees can support good causes and volunteer. However, as an employer, you can place fair restrictions, following the advice of the above FAQ.

I have employees with family overseas. Can they return home while on furlough and still receive payments?

Through the current global pandemic of coronavirus, it is highly unlikely that overseas travel will be made. However, the only provision under the Job Retention Scheme is that employees must not work for you. If travel is possible later down the line, it is important that you communicate your return to work policy as a company. This will include your needs for employees to return to work immediately, as and when safe to do so. Further information regarding travel while on furlough is likely to arise over the next few weeks, as borders reopen.

How is the £2,500 threshold measured? Is this based on gross or net income?

From an employee’s viewpoint, payments will be based on gross income. The maximum that the Government will cover is £2,500, which will be 80% of an employee’s annual salary. If employees earn over £37,500 a year, a threshold of £2,500 will be set.

Is the Government supporting other payment routes through the coronavirus period, including pension contributions and National Insurance?

Employee payments will continue as normal, where pension contributions, National Insurance payments and personal tax brackets are followed.

I have a part-time employee. Can the £2,500 cap be prorated?

The £2,500 cap isn’t based on the number of hours worked. It is instead based on the overall salary band. Therefore, it will not be prorated for part-time employees.

Employment contracts specify how holidays will continue to accrue. Is this the case for the coronavirus period, while on furlough?

Limited guidance has yet to be published regarding holiday accrual. However, the Government has stated how employment contracts and their contents do withhold. With this in mind, if holidays are naturally accrued, this will likely be the case for the furlough period. Please keep your eyes peeled for further information regarding this subject by the Government.

Can I help my contractors through the Job Retention Scheme?

As contracts are self-employed or classed as freelancers, this scheme cannot be used to support them. If contracts are registered on your PAYE, funding may be available. Yet, in most cases, they are classified as a standalone company, offering business services.

Please guide your contractors to source support through the Governments support package through the coronavirus pandemic for self-employed individuals. 80% of income can also be claimed for self-employed individuals. However, eligibility varies significantly from the Job Retention Scheme.

When are salary measures based from? Can I increase my employee’s salaries now and benefit from this through the scheme?

Salary measures are based from 19th March 2020. With this in mind, if you’ve already made any changes or intend on doing so, you will not receive further financial support to make up the difference.

How can I apply for the Job Retention Scheme?

Work is still going ahead on the scheme. With this in mind, an application currently isn’t available. However, once available, a new online portal through HMRC will be present. Here, all applications will be reviewed. If accepted, payment will be made within a few weeks. The current timescale for the availability of the online portal is towards the end of April.

Do I have a limit on the number of employees I furlough?

These are unprecedented times. It is difficult to gauge how the next few months will pan out for businesses. With this in mind, there isn’t a limit on the number of furloughed employees. Employees can be furloughed across the process, following fair selection strategies. Likewise, once furloughed time frames have been completed, employees can return to work, following the demands of the business and industry.   

My employee has coronavirus. What must I do as an employer?

If your employee is off work, due to coronavirus symptoms, sick pay will be available to them. Although commonly available after 4 days off work, they will be entitled to sick pay from day 1, where the possibility of claiming 14 days of sick pay may be available. Please check employment contracts to ensure sick pay is available to all employees.

My employee is self-isolating yet is working from home. What will they receive?

As your employee is working, they will receive their normal pay. If they do become unwell, sick pay will be accessible. Likewise, if a pause to workload is required, you can implement the Job Retention Scheme to support your employees.

My employee is self-isolating yet unable to work from home. What are my legal obligations?

As your employee is unable to work, sick pay will be available for their self-isolating period. This is in place as the Government promotes that all individuals who are vulnerable or experiencing symptoms must self-isolate. As an employer, you can however opt for furlough once your employee’s sick period has finished.

My employee is at home, however, will not work. What financial support is available and how do I go about this?

This can be a difficult subject as financial support will not be available if your employee isn’t sick, isn’t self-isolating and isn’t on furlough. If your employee is failing to follow your guidance and isn’t cooperating, the disciplinary process may be required. Through this scenario, it is recommended to discuss this situation with your HR department and how you deal with disciplinaries internally.

My employee is at home yet is struggling to work due to childcare etc? What are my options as an employer?

Flexibility is vital through this current pandemic. However, if workloads and responsibilities cannot be maintained, it is advised that you discuss all options with your employee, including holidays, unpaid leave or even furlough. It’s important to keep both the business and employee’s best interest at heart through this difficult time.

The above are common questions we’ve experienced regarding general obligations as employers and also the Job Retention Scheme. As all circumstances vary, along with employment contracts and business needs, it is imperative that you use the above information as a guideline.

For accurate guidance, to act upon, we recommend visiting the Government website or contacting the appropriate department. As all schemes are currently new, there is limited information on legislations and best practises. With this in mind, we do not accept responsibility based on your actions from the above. To ensure you’re accurately supporting your business and employees through the coronavirus pandemic, we recommend sourcing support, personalised for your needs.

For the latest updates on the Coronavirus Job Retention Scheme, please refer to the government covid-19 support documentation here.

Rachael Olukoju
Rachael Olukoju

Rachael is a diligent qualified accountant with audit experience and joined us from a top 15 accountancy firm. With a thirst for knowledge and personal development, Rachael continues to study towards further qualifications. She is a strong communicator who is passionate, goal-driven and leads by example. Rachael has significant experience in management and statutory accounts preparation and review alongside a strong understanding of reporting and completion against strict deadlines.