We are receiving a lot of questions surrounding this new concept of a furloughed employee. The following is our understanding, but should not be relied upon for advice at this stage. We STRONGLY RECOMMEND that you speak with your employment solicitor for advice.
1) Furlough is from 1st March 2020 and will last for at least 3 months.
2) It is available to employees on the payroll as at 29th February 2020, and the amount of grant will be calculated based on the 12 weeks running up to 29th February.
3) Furloughed employees MUST NOT work for the employer during the period of furlough.
4) All UK businesses are eligible, and the scheme pays a grant for qualifying payments through a new online system, which is being built at the moment for this purpose. There will therefore be a negative cash flow to the employer until such time as the grant can be accessed.
5) RTI reporting of payroll will be done as normal for the payments.
6) The maximum grant is 80% of wage costs ( gross + employers NIC + auto enrolment pension etc ) up to a maximum of £2,500 per month.
7) The rules of the scheme are being designed with underlying reference to employment law. Employment contracts are necessary, as are amendments to that contract to cover furlough. Hence the necessity to speak with your employment law solicitor.
8) The scheme is an option instead of redundancies. It is not to cover employers who make the decision to send home their employees, or to replace sick pay.
PLEASE DO NOT ASSUME THIS IS AN AUTOMATIC RIGHT THAT THE EMPLOYER WILL RECEIVE. WE CURRENTLY BELIEVE THAT HMRC WILL ULTIMATELY CARRY OUT CHECKS TO VERIFY THE VALIDITY OF BOTH THE AMOUNTS PAID AND ALSO THE RIGHT TO CLAIM THE GRANT.