Government's announcement on 80% salary support
80% of furloughed staff wages to be met by grant
The Chancellor announced on Friday 20th March the creation of the Coronavirus Job Retention Scheme (CJRS), under which all employers can apply to HMRC for a grant to pay 80% of the wages of retained staff who are not working (known as “furlough”) up to a maximum of £2,500 per worker per month.
It is important to note that much detail has yet to be confirmed but that this is NOT a grant to meet 80% of ALL wages.
The CJRS will be backdated to 1st March 2020 and will remain in place until at least the end of May 2020. It is likely that payments will be made by the end of April. Government guidance just released states:
“You will need to:
designate affected employees as ‘furloughed workers’, and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation;
submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)”
Further Clarification Required
There are so many unanswered questions:
What is meant by staff who are “furloughed”?
What happens if an employee is laid off but is asked to do a few hours work from home - can the employer claim under CJRS for them?
If the employer furloughs staff under the scheme can they work for another employer?
What about staff that work for two employers – one who furloughs them and one who doesn’t?
Where pay is variable, we do not yet know the basis that HMRC will use to assess how much they are entitled to under the CJRS. (The usual calculation for a “week’s pay” is based on the average of the last 12 weeks).
Is a qualifying period of service required before the CJRS applies? There is potential for abuse and HMRC will not have the resources to investigate many cases.
As yet it is unclear whether the employer has to physically pay the employee in order to claim the grant and if so, do they have to deduct tax and national insurance in the usual way?
As soon as the position on this becomes clearer, we will update you.