The government introduced the Coronavirus Job Retention Scheme in March in a bid to avoid mass redundancies being made by UK businesses that have been severely impacted by coronavirus. Any UK organisation with employees can apply, providing it created and started a PAYE payroll scheme on or before 28 February 2020 and has a UK bank account. The scheme allows employers to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, for up to £2,500 a month.
The government has confirmed that a director can be furloughed in the same way as other employees. However, they can still carry on the statutory duties as a director, as these do not count as work. If a director receives a salary through PAYE, they are eligible for the support of 80% of their qualifying salary. This is up to the £2,500 monthly limit.
Circumstances will vary, and there is still a lot of uncertainty surrounding furlough leave for directors. Please do get in touch if you have any additional questions, as Clayton & Brewill can provide guidance tailored to individual cases.
The Cabinet Office has published updated guidance confirming that furlough leave can also be offered to off-payroll contractors working for public sector organisations, described as contingent workers in the announcement. It clarifies that the payments apply to PAYE, Umbrella, and Personal Services Company contractors.
For many employers, the Coronavirus Job Retention Scheme will allow them to retain and continue to pay key members of staff that would have otherwise been made redundant. It means that, when the crisis is over, employers will have an existing workforce ready and waiting to resume work, rather than having to go through a lengthy recruitment process.
Further government guidance on the Coronavirus Job Retention Scheme can be found here.