Please note: this is a fast-moving situation and things can change from day to day. Always check back for the latest advice.
- Read government guidance on the job retention scheme
- Read government FAQs about the scheme.
- Read our coronavirus FAQS.
- Visit the government's coronavirus financial support page.
- Watch a government video about supporting your employees.
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.
- What is the government’s coronavirus job retention scheme?
- What if I can't afford to pay my staff before the scheme is up and running?
- Who can claim it?
- What will I need to make a claim?
- What financial help will be available?
- Do I have to declare this as income for tax purposes?
- Do I have to top up wages to 100%?
- What about the tax, National Insurance and pension contributions my employees normally have to pay?
- Can my claim for 80% of wages include past overtime, fees, commission or bonuses?
- What if my employee's wages vary from month to month?
- What happens if my employee works for someone else as well?
- Can my employee take on a new job while they are furloughed?
- What other help may be available for my employees?
- How do employers apply?
- What do employers need to do now?
- Can I furlough all my employees? (Plus links to furlough letters for staff)
- What about the National Minimum Wage and National Living Wage?
- Can my employees do any work or training while they are furloughed?
- Can my apprentice do online training while they are furloughed?
- What's happening about apprentices in England?
- What rights do furloughed employees have?
- Can my employees do voluntary work while they are furloughed?
- What about employees who are off sick or self-isolating?
- What about employees who are on unpaid leave or cannot work because they are caring for dependants due to coronavirus?
- What happens about annual leave?
- What about employees on maternity leave, contractual adoption pay, paternity pay or shared parental pay?
- What happens to employees returning from maternity/paternity leave etc?
- Can employees be made redundant instead?
- What if I have already made my employees redundant due to the coronavirus outbreak?
- Can I furlough employees more than once?
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. This is a temporary scheme and will be open for at least three months starting from 1 March 2020.
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.
If your business needs short term cash flow support before this scheme kicks in, you may be eligible for a coronavirus business interruption loan.
Under the job retention scheme you can claim for:
- Full-time employees
- Part-time employees
- Employees on agency contracts (who are not working).
- Employees on flexible or zero-hour contracts.
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.
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 28 February 2020 and have a UK bank account.
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.
You will only be able to make one claim at least every three weeks. Claims can be backdated to 1 March if applicable.
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. (However, see the FAQs on what to pay employees and apprentices if they do training while furloughed.)
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.
Payments received under this scheme must be included as income as part of your taxable profits for Income Tax and Corporation Tax purposes.
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.
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.
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’.
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.
They can be furloughed for each job and each job is treated separately under the scheme.
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.
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:
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.
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 when the systems are in place to do so. It is expected that this will be at the end of April.
You must write to your employers to explain what is happening and keep a written record of all your communications. 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.
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.
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.
The scheme will make up 80% of wages for all employees including those on the NMW. This amount could be less than the NMW.
- If an employee does training while they are furloughed they should be paid the NMW/NLW for this time. See more on this below.
The government has said:
A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.
6 April 2020: Employees, apprentices and business owners are allowed to do training while they are furloughed as long as the training does not provide services to or generate revenue for the business.
The government has provided the following clarification in relation to training while on furlough:
Time spent training is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage, taking into account the increase in minimum wage rates from 1 April 2020.
As such, employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours. Where the furlough payment is less than the appropriate minimum wage entitlement for the training hours, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for 100% of the training time.
What about 'work'?
The NHBF is currently pushing for clear answers from the government about whether or not employees, apprentices and business owners are allowed to do any work while they are furloughed and which 'work' would be classified as a 'revenue-generating activity'.
We are doing all we can to clarify this as quickly as possible and will keep you updated.
Apprentices can continue to train while furloughed as long as the training does not provide services to or generate revenue for the business.
However: the government has made it clear that if your apprentice does online training while furloughed this will count as work and must be paid at the National Minimum Wage (NMW) or National Living Wage (NLW).
If the pay they get on furlough (80% of their usual wage) is not enough to cover the NMW/NLW they are entitled to, the employer must make up the amount so the apprentice gets paid the NMW/NLW for those hours spent doing online training.
Don’t forget: The National Minimum Wage has now increased for 2020/2021. Find out more.
Government information about apprentices in England
The government has published detailed Q&As relating to apprenticeships in England during the current coronavirus crisis. 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.
We are currently seeking clarification from the government about whether or not apprentices can access online training while their apprenticeship is paused. Our current understanding is that if they do, it will not count towards their apprenticeship.
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.
Yes, as long as this does not provide any revenue for your business.
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.
Our legal advice is that employers should agree with their employees (or give notice to them) that annual leave cannot be taken while they are furloughed. This is because it is not yet clear if taking annual leave would interrupt any period of furlough leave being claimed. There is no clear guidance from the government yet.
Employers should cancel any annual leave employees have booked during furlough leave and put those annual leave days back into the employee’s holiday pot to take another time when your salon/barbershop has re-opened.
This will also affect employees who are required to take annual leave for bank holidays – especially as the two Easter bank holidays are approaching.
Employers should also cancel any annual leave booked for bank holidays during furlough leave and put those annual leave days back into the employee’s holiday pot.
What if my employees are given bank holidays in addition to their annual leave?
If any of your employees would in normal circumstances have been working on a bank holiday, you will need to put that day back into their holiday pot.
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.
Please note: employees will continue to accrue their annual leave while on furlough.
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.
The new regulations will allow up to four weeks 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?
If your employee is eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and they are entitled to claim up to 39 weeks of statutory pay or allowance.
If you offer enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the scheme.
The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.
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 cannot return to work on the date they were expecting to. Their furlough will start on the first day they are due back to work.
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.
The job retention scheme covers employees who have been made redundant since 28 February 2020 as a direct response to the coronavirus outbreak, provided they are rehired by their employer.
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.
Yes, you can. But each period of furlough must be for at least three weeks.