At the start of the coronavirus outbreak the activity of many businesses dropped sharply, or even ceased altogether, with employees losing their jobs or in severe danger of doing so.
In response to the situation, the Government announced a scheme under which they will pay 80% (up to £2,500 per month) of the salaries of employees on "furlough" for the next three months. HMRC has now given details of how employers can claim under the scheme.
For employers to be able to claim, the relevant employee must have been on the payroll at 28 February 2020 and must have been put "on furlough" - carrying out no work. If an employer made employees redundant as a result of coronavirus, they can reverse the redundancy and re-engage the employee to join the scheme.
The scheme will save many jobs that would otherwise have been lost. It should protect the income of vulnerable employees, in full or at least in part, and hopefully leave the country in a better position to restart operations when the crisis has passed.
However, there is one unfortunate side effect relating to the requirement that the employee not work for the company during the period of furlough. This means that an employer who was not wanting to make anyone redundant and tried to act fairly by reducing the hours of all employees will not be able to claim. Instead, the employer will have to select certain employees to carry out no work with the remainder continuing to work as before. What is not yet completely clear is whether an employer can rotate "furloughed" employees, so that some of them start their furlough in May, being replaced by others who were on furlough in April.
It is also important to remember that all of the rules on non-discrimination apply to decisions in putting employees on furlough just as they do to other employment decisions.
Employers will want to review their positions and follow the guidance in respect of claiming the allowance. As is always the case for tax, it is essential that employers keep good records and follow the requirements (for example in relation to notifying to furloughed employees) strictly to ensure that claims are not rejected.
The following link gives more detailed guidance on the job retention scheme and what employers need to know:
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. We expect the scheme to be up and running by the end of April. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme?utm_content=immediate
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