WHAT IS THE FURLOUGH SCHEME?

RMT helpline 0800 376 3706 :: may bulletin 2 2020 :: RMTnews 8 T he government has introduced a Coronavirus Job Retention Scheme, the Furlough Scheme, and the union is currently negotiating with the various companies members work for to put it into place. Furloughed employees are those being kept on but with no work to do. Essentially employers will be able to recover 80 per cent of their employees’ wages through HMRC. At present this is with effect from 1 March 2020 for a three month period, but this may be extended. It is a temporary scheme. The Furlough Scheme only applies to PAYE employees on the payroll on March 19 2020. THE FURLOUGH SCHEME The intention of the Furlough Scheme is to save jobs and protect employees’ pay by paying part of their salary for those employees that would otherwise have been laid off. WHAT IS IT? The Furlough Scheme only applies to employees on PAYE whereby the employer will be re-imbursed by HMRC 80 per cent of the employee’s wages, subject to a cap of £2,500 per month. The employee’s payment would be subject to the usual deductions for tax and NI. The employer can top up the difference but does not have to, (subject to employment law and renegotiating any contractual entitlements). At present the systems at HMRC are not set up to facilitate payments to employers and this may take a number of weeks to implement which will cause a delay in employers receiving payments from HMRC. Government Guidance suggests that HMRC will be ready to facilitate payments by the end of April 2020 and claims can be backdated to 1 March 2020. Employers can only claim once every three weeks. Government Guidance refers to “all employment costs” which does not include employer’s NI and minimum auto-enrolment pension contributions on that wage. Fees, commissions and bonuses are not included. The Furlough Scheme only applies where the employee stops working and does not apply if the employee reduces the hours or days that they work. Even if the employee works for an hour they will not be eligible. The Government Guidance states that the Furlough Scheme is available to all UK businesses, the government does not expect public sector employers to use it as long as central government continues funding wage costs in the normal way. IRREGULAR EARNINGS For employees whose pay varies the 80 per cent will be based upon the higher of: the same month’s earnings from the previous year; or average monthly earnings in the 2019- 20 tax year. If the employee has been employed for less than one year the furlough pay will be 80 per cent of their average monthly earnings since they started work. NATIONAL MINIMUM WAGE (NMW) Employees are only entitled to the NMW for the hours they work. So, if they are furloughed and do not work and 80 per cent of their normal earnings would take them below the NMW based on their normal working hours, they will still only receive 80 per cent as they are not working. However, they will be entitled to be paid the NMW for any time spent training. WHO CAN BE FURLOUGHED? Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero hours contracts. Those caring for children, shielding or with WHAT IS THE FURLOUGH SCHEME? RMT explains the emergency scheme to protect the income of workers during the coronavirus