As the furlough scheme evolved, guidance on claiming for furloughed employees was updated regularly. Payments were made every three weeks, as three weeks was the minimum period a furlough could last.
In this video update, Niel discussed the government’s 2020 furlough scheme and its role in supporting staff retention during a time of economic uncertainty.
Businesses needed to have:
- created and started a PAYE payroll scheme on or before 28 February 2020;
- enrolled for PAYE online – this can take up to 10 days;
- a UK bank account.
Anyone with a UK payroll could apply including businesses, charities, recruitment agencies and public authorities.
Apprentices
Apprentices could be furloughed in the same way as other employees and were able to continue training during furlough.
However, employers must pay Apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage for the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.
You were entitled to claim:
- 80% of your staffs wages up to a maximum of £2500, this includes people on the National Minimum Wage;
- The minimum automatic enrolment employer pension contribution on the 80%;
- Employer National Insurance contributions on your furloughed employees pay.
What was included in the calculation of employees wages:
- Pay;
- Past overtime;
- Fees and compulsory commission payments.
What was not included:
- Discretionary bonuses;
- Discretionary commission;
- Tips;
- Taxable benefits in kind;
- Non-cash payments;
- Benefits provided through salary sacrifice e.g. pension payments.
HMRC agreed that Covid-19 counts as a life event that could allow changes to salary sacrifices.
What wasn’t covered
- Apprenticeship levy;
- Student loans;
- Additional National Insurance of pension contributions you make to top up employees salaries;
- Any pension contributions that you make above the mandatory employer contribution.
Making a claim
- You needed:
- your ePAYE reference number;
- the number of employees being furloughed;
- claim start and end dates;
- amount claimed;
- your bank account and sort code;
- your company contact name & phone number.
- Calculate the amount you are claiming:
- The claim can only be made shortly before, or when you are running payroll.
- You cannot make a claim before you run payroll.
- if you do not intend to ‘top-up’ the employee’s pay for the 20% of income not covered, you need to ensure that the payroll is processed using only the amount calculated as your claim.
- Claims were submitted through an HMRC portal introduced in April 2020.
Furloughed workers could be paid the lower of 80% of their salary or £2500 even if, based on their usual working hours, this would be below their appropriate minimum wage.
Since the furlough scheme concluded, businesses have embraced new approaches to staff retention, focusing on flexible work policies, mental health support and clear growth pathways. People Matters HR offers tailored solutions to help you build a resilient and engaged workforce in today’s environment. Get in touch with our team to learn more about modern staff retention strategies that strengthen workforce resilience and drive growth.