Please note: this is a fast-moving situation and things can change from day to day. Always check back for the latest advice.

Don't fall for fraudsters and scammers

Fraudsters and scammers will be trying to take advantage of those who are anxiously waiting for financial support to come through. Be very wary if anyone contacts you via phone, email, post or text claiming to be from the government, HMRC or any other body such as a local council or bank. In addition, fraudsters have been registering websites with names such as 'Coronavirus Compensation Ltd' - use only the official gov.uk website.

The government has published guidelines to help you avoid scammers and fraudsters during the coronavirus crisis. Do take the time to read it. It explains what correspondence you can expect to receive and how to tell if an email or text is fraudulent.

FAQs

What is the government's coronavirus job retention scheme?

UK employers will be able to get financial support to help pay the salaries of staff who would otherwise be laid off without pay due to the coronavirus outbreak. 

The furlough scheme has been extended for four months until the end of October (it had been due to finish at the end of June.) 

  • From 1 July 2020, employers can bring back furloughed employees on a part-time basis. Employers must pay wages for the hours their employees work. Employers will still be able to claim under the scheme for the hours not worked. You will need to agree any flexible furlough arrangements with your employees. 
  • In August, the government will pay 80% of wages up to a cap of £2,500. Employers will pay:  National Insurance and pension contributions for the hours the employee does not work. 
  • In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will pay: 10% of wages to make up the amount to 80% up to a cap of £2,500. National Insurance and pension contributions for the hours the employee does not work.
  • In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will pay: 20% of wages to make up the amount to 80% up to a cap of £2,500. National Insurance and pension contributions for the hours the employee does not work.

Under the job retention scheme you can claim for employees who started their employment with you and were on your PAYE payroll on or before 19 March 2020, and for whom you have made an RTI submission to HMRC. This would include:

  • Full-time employees
  • Part-time employees
  • Employees on agency contracts (who are not working).
  • Employees on flexible or zero-hour contracts.

Scheme will close to new entrants from 30 June 

The scheme will close to new entrants from 30 June 2020. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period before 30 June 2020. 

This means that the final date by which an employer can furlough an employee for the first time will be 10 June 2020. 

Returning parents still eligible for furlough scheme

People on paternity and maternity leave who return to work in the coming months will be eligible for the government’s furlough scheme even after the 10 June cut-off date. This will only apply where they work for an employer who has previously furloughed employees.

Employees on adoption leave, shared parental leave, and parental bereavement leave are eligible. Find out more on the government website

Can my employees work part-time?

Salons and barbershops can now bring furloughed employees back to work on a part-time basis. This change has been in force since 1 July 2020. 

You can decide the hours and shift patterns your employees work. The government will continue to pay 80% of salaries for the hours your employees do not work (This goes down to 70% in September, and 60% in October). 

Find more information on the government website

The furlough scheme will remain open until October. Find more details about how it will work until then.

How do I apply to the scheme?

The government has published a step-by-step guide to claiming for your employees’ wages through the coronavirus job retention scheme

Please note: 

  • Take the time to read the instructions in the step-by-step guide – don’t start your online claim until you have gathered all the information you need as set out in the guide.
  • Once you have made your claim you will NOT receive a confirmation email. You will see a claim reference number on the screen that you should make a note of.
  • Tell your employees that you have made a claim and that they do not need to do anything else.
  • HMRC will verify your claim and you should receive funds within six working days.
  • Keep all your paperwork, records and calculations relating to the scheme for five years.

To access the system and make a claim you will need: 

  • A Government Gateway ID and password.
  • An active PAYE enrolment.

If you do not have these, you can register for them at:

Remember: don’t be caught out by scammers and fraudsters – use only the government’s official online system to apply.

What about employees who started work after 19 March 2020?

They will not be eligible for the job retention scheme as their employment began after 19 March 2020. They would therefore need to be laid off in accordance with their contract (if a lay off clause is in place) or with their agreement in order to retain their job and avoid redundancy while the salon/barbershop is not trading.

It is at the business owner’s discretion to pay them anything over and above the applicable statutory guarantee payments during this period. Find out more on the government website.

What if I don't want to reopen when the government says I can?

Some NHBF Members have expressed concerns about reopening, even when the government says they can. They are asking if they can continue to claim under the furlough scheme if they don’t reopen straightaway. 

The government has not yet provided a definite answer to this. We will let you know as soon as we hear anything.

What if I can't afford to pay my staff before the scheme is up and running?

Our legal team's advice is to furlough your staff even if you can't afford to pay them. You should explain the scheme to them and say you will be applying for financial help to pay 80% of their wages.

If your business needs short term cash flow support before this scheme kicks in, you may be eligible for a coronavirus business interruption loan.

If any of your employees say they do not want to be furloughed, seek legal advice. It is likely that they will prefer being furloughed to other alternatives such as being made redundant or the closure of your business.

Who can claim it? 

All UK businesses are eligible. 

Our understanding is that any business will be entitled to the financial support if they close or need to lay off staff due to the coronavirus outbreak – whether or not the government has officially told them to close. 

You must have created and started a PAYE payroll scheme on or before 19 March 2020 and have a UK bank account.

The government has published a step-by-step guide to claiming for your employees’ wages through the coronavirus job retention scheme

What will I need to make a claim?

Employers will have to apply through HMRC. It is expected that the scheme will be up and running by the end of April. Employers will then be able to claim the financial support available via an online portal. To claim, you will need:

  • Your ePAYE reference number.
  • The number of employees being furloughed.
  • The claim period (start and end date).
  • Amount claimed (the minimum length of furloughing is three weeks).
  • Your bank account number and sort code.
  • Your contact name.
  • Your phone number.

You will need to calculate the amount you are claiming. HMRC will retain the right to audit all aspects of your claim.

Claims can be backdated to 1 March if applicable. 

The government has published a step-by-step guide to claiming for your employees’ wages through the coronavirus job retention scheme

What financial help will be available? 

The government has announced that it will reimburse 80% of employees’ gross pay before tax and deductions up to a maximum of £2,500 per person per month. Claims can be backdated to 1 March 2020 if applicable.

The government will also pay the following additional costs (more government guidance will become available on this):

  • National Insurance contributions normally paid for by the employer.
  • The minimum automatic enrolment employer pension contributions normally paid for by the employer.

Important note: when claiming 80% of employees' wages, this will be based on wages as of 28 February 2020. Furloughed employees are not entitled to receive the NMW/NLW wage increases that came into force on 1 April 2020. 

What about dividends? 

Dividend payments are not covered by the job retention scheme. This is because income from dividends is a return on investment in the company rather than wages and so not eligible for support under this scheme.

How far in advance can I claim my employees' wages?

You can claim up to 14 days in advance of their normal pay date.

What about my weekly paid staff?

If you have weekly paid employees you can submit weekly applications as applications are made per pay period. However, your employee must be furloughed for a minimum of three weeks to be eligible for the scheme.

How long after applying will payments be made?

Normally, payments will be made within four to six days of an application being made.

Will the system have enough capacity to deal with all the applications?

The system has been tested to ensure it can handle up to 450,000 applications an hour.

When will the first payments be made?

First payments are expected to be made by 30 April. (You may have heard that some payments have already been made – this would have been via the system during testing.)

Do I have to declare this as income for tax purposes?

Payments received under this scheme must be included as income as part of your taxable profits for Income Tax and Corporation Tax purposes.

Do I have to top up wages to 100%?

Employers can decide whether or not they wish to top up the remaining 20%. They do not have to pay it.

You cannot claim for employer National Insurance or pension contributions on any amounts you pay over the 80% provided by the government.

What about the tax, National Insurance and pension contributions my employees normally pay?

While on furlough, your employees' wages will be subject to the usual income tax and National Insurance.

They will also pay their automatic enrolment pension contributions on qualifying earnings unless they have opted out of the pension scheme.

Can my claim for 80% of wages include past overtime, fees, commission or bonuses?

Our current understanding based on the latest government information is that it will be unlikely that you can include discretionary bonuses/commission payments, tips or ad hoc commission payments on product sales. 

However, it is likely that you will be able to claim for:

  • Regular commission payments on services.
  • Commission payments that are made as part of the contract of employment.
  • Past overtime.
  • ‘Fees’ (the government does not define what ‘fees’ are).

This is because the government has now stated that employers can claim back ‘any regular payments you are obliged to pay your employees’.

What if my employee's wages vary from month to month?

If your employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:

  • The same month’s earning from the previous year.
  • Average monthly earnings from the 2019-20 tax year.

If your employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

If your employee only started in February 2020, you will need to work out their earnings on a pro rata basis.

Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.

What happens if my employee works for someone else as well?

They can be furloughed for each job and each job is treated separately under the scheme.

Can my employee take on a new job while they are furloughed?

HMRC says that while an employee cannot do any work for the employer who has furloughed them, they can, in theory, take on work for another employer. This would mean they earn 80% of their wages from the first employer, and 100% of their wages from the new job. 

However: bear in mind that this will depend on what their employment contract says. Many contracts state that the employee cannot take on other employment without their employer’s permission.

What other help may be available for my employees?

Citizens Advice has provided the following links that may be useful for your employees if they are struggling financially before the 80% payments kick in:

Your employees can also read this government advice.

How do employers apply? 

Employers will have to apply through HMRC. It is expected that the scheme will be up and running by the end of April. Employers will then be able to claim the financial support available via an online portal.

You will only be able to make one claim at least every three weeks, which is the minimum amount of time an employee can be furloughed for. Claims can be backdated to 1 March if applicable.

What do employers need to do now? 

You will need to designate affected employees as ‘furloughed’. This means your employees are on a leave of absence. The minimum length of time an employee can be furloughed for is three weeks.

You must tell HMRC about the employees who have been furloughed using the online system that opened on 20 April 2020. The government has published a step-by-step guide to claiming for your employees’ wages through the coronavirus job retention scheme

Write to your employees

You must write to your employers to explain what is happening and confirm that they have been furloughed. This must be done in a way that is consistent with employment law (see below). Keep a written record of all your communications. Employees do not need to send a written response. See 'Can I furlough all my employees?' below for links to letters NHBF Members can download. 

You will need to keep these records for five years.

Can I furlough all my employees?

If your employment contracts state that you can lay off staff (the NHBF contracts DO have this clause), then you can furlough your staff.

If your employment contracts DO NOT state you can lay off staff, you will need their agreement to furlough them.

Download a furlough letter to send to staff who DO have a lay off clause in their contract.

Download a furlough letter to send to staff who DO NOT have a lay off clause in their contract.

What about the National Minimum Wage and National Living Wage?

The government has confirmed that:

  • Employees are entitled to the National Minimum Wage (NMW) when they are working.
  • Furloughed employees are not working and so are not eligible for the National Minimum Wage during this time.

What are my employees allowed to do while they are furloughed?

 

The government says:

 

During hours which you record your employee as being on furlough, you cannot ask them to do any work for you that:

  • Makes money for your organisation or any organisation linked or associated with your organisation.
  • Provides services for your organisation or any organisation linked or associated with your organisation.

Your employee can:

  • Take part in training.
  • Volunteer for another employer or organisation.
  • Work for another employer (if contractually allowed). 

What is happening about apprentices in England?

Government information about apprentices in England 

The government has just updated (19 May 2020) its guidance for apprentices, employers, training providers and assessment organisations in England. It includes information on training and assessment in line with safer working guidelines, calculating wages for furloughed apprentices, support for redundant apprentices and FAQs. Find out more.

England: Can I pause my apprentice’s training? 

There is no need to report or record breaks in learning of less than four weeks. 

Employers and learning providers can initiate a pause in learning if the break is related to the coronavirus outbreak and will be longer than four weeks. (Apprentices will still be furloughed and employers can claim 80% of their usual wages.) 

Breaks of longer than four weeks must be reported and recorded on the apprentice’s individual learning record (ILR). 

Payment to the training provider will be suspended for the duration of the break. 

The ILR must be updated when the apprentice resumes their apprenticeship training. 

How to pause an apprenticeship 

This ten-minute video explains what employers and training providers need to do when reporting a pause in learning of longer than four weeks. It includes an initial explanation then clear instructions from about half-way though. The video explains that you need to be careful about:

  • Ensuring you select ‘pause’ rather than ‘stop’ when reporting a pause in your apprentice’s training. If you select ‘stop’ this will end the apprenticeship.
  • The exact date when you pause an apprentice (otherwise the training provider may not be paid for training already delivered). Any payment made to training providers for training that was not provided in March due to the coronavirus outbreak should be used to provide training at a later date. 

What rights do furloughed employees have?

 

Employees who have been furloughed have the same rights as they did previously. This includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and the right to redundancy payments.

 

Your employees' annual leave will continue to accrue while they are furloughed.

 

Can my employee do voluntary work while they are furloughed?

 

Yes, as long as this does not provide any revenue for your business.

 

What about employees who are off sick or self-isolating? 

These staff can be furloughed when they are again fit for work. In the meantime, they would continue to receive the Statutory Sick Pay and contractual sick pay they are entitled to. 

What about employees who are on unpaid leave or cannot work because they are caring for dependants due to coronavirus?  

HMRC has stated that employees who have caring responsibilities resulting from the coronavirus outbreak can be furloughed.

This could potentially include those on unpaid leave because they are at higher risk, or live with someone who is high risk, or have been laid off on nil pay or are on sabbatical.  

What happens about annual leave? 

Please note: This advice was updated on 20 April 2020 following clarification from the government and advice from our legal team.

Employees on furlough can take annual leave without disrupting their furlough. However, employers are required to top up pay to normal 100% levels for any holiday days taken during the furlough period.

Please note: While on furlough, employees will continue to accrue their statutory annual leave entitlement and any additional annual leave provided for in their employment contract. 

If you wish to instruct employees to take annual leave you can do so by giving notice that is twice the length of the holiday you require them to take (i.e. two weeks’ notice to take a one-week holiday). Please note that instructing employees to take all their annual leave during a lockdown period could affect the relationship of trust and confidence between you and your employee. Also, this could possibly be in breach of the Working Time Directive. Always speak to a legal adviser before forcing any holiday periods of longer than one week. 

What if my employee was on holiday when I furloughed other staff? 

Your employee will be entitled to their usual holiday pay until their booked annual leave comes to an end. They should then be furloughed.

Carrying forward annual leave

It has been announced that employees will not lose any annual leave they are unable to take during the leave year because of the coronavirus outbreak. Read our blog post about this.

The new regulations will allow up to four weeks (20 days for a full-time employee) of unused leave to be carried over into the next two  years. 

In normal circumstances, very little annual leave entitlement can be carried over. Employers are obliged to ensure their employees take their statutory entitlement to annual leave in any one year. 

What about employees on maternity leave, contractual adoption pay, paternity pay or shared parental pay?

The normal rules for maternity and other forms of parental leave and pay apply.

You can claim through the scheme for any amounts you normally pay in addition to the statutory pay for employees who qualify for:

  • maternity pay
  • adoption pay
  • paternity pay
  • shared parental pay

Furloughed workers planning to take paid parental or adoption leave starting on or after 25 April 2020 will be entitled to pay based on their usual earnings rather than the furloughed pay rate, the government has announced. 

This means that under the job retention scheme full earnings will apply to Maternity Pay, Paternity Pay, Shared Parental Pay, Parental Bereavement Pay and Adoption Pay. 

Find out more.

What happens to employees who are returning from maternity/paternity leave etc?

Returning parents eligible for furlough scheme

People on paternity and maternity leave who return to work in the coming months will be eligible for the government’s furlough scheme even after yesterday’s 10 June cut-off date for all other employees. This will only apply where they work for an employer who has previously furloughed employees.

Employees on adoption leave, shared parental leave, and parental bereavement leave are eligible. Find out more on the government website

Furlough scheme now closed to new entrants for everyone else

The final date by which an employer needed to place any other employees on furlough was Wednesday, 10 June.

You will need to explain what is happening to your employee and discuss the furlough leave arrangements with them. You will need to explain that they may not be able to return to work on the date they were expecting to. Their furlough will start on the first day they are due back to work.

Can employees be made redundant instead? 

The law says you must explore alternatives to redundancy as part of a fair process. Dismissing employees without attempting to use the job retention scheme and other financial assistance set out by the government is likely to be regarded as unfair. 

What if I have already made my employees redundant due to coronavirus?

Employees who were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough. 

Our legal team suggests that a conditional offer of re-engagement be made to the dismissed employee confirming that you will re-employ them on the understanding they will be furloughed. You can then apply for financial help under the job retention scheme.

The offer of re-employment should also confirm that if the application to the scheme is rejected for any reason you are under no obligation to pay the employee nor to provide them with work.

You are under no obligation to re-hire employees who were made redundant. If you are planning to re-hire employees, always take legal advice.

Can I furlough employees more than once?

Yes, you can. But each period of furlough must be for at least three weeks.

How will HMRC monitor the scheme (keeping records)?

HMRC will have the right to investigate claims made under the scheme – including for a period of time after claims have been made and paid. For this reason, make sure you keep all your documentation and records relating to your employees’ furlough arrangements for at least six years. Details about the information you will need to keep can be found on the government website.