Job retention scheme explained: How long do you have to work to be eligible for furlough?

The job retention scheme enables businesses with a pay as you earn scheme to access support to continue paying employees’ salary for those who would otherwise have lost their roles. The HM Revenues and Customs (HMRC) will reimburse 80 percent of their wages up to £2,500 a week. But how long do you have to have worked to be eligible?

What is the job retention scheme?

On March 20, the Chancellor of Exchequer Rishi Sunak unveiled a series of financial measures aimed at assisting people, jobs and businesses amid the coronavirus crisis.

One of the key measures including in the £330bn package was the new coronavirus job retention scheme.

Mr Sunak said: “Any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme.

“Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off.

“Government grants will cover 80 percent of the salary of retained workers up to a total of £2,500 a month – that’s above the median income.

“And, of course, employers can top up salaries further if they choose to.”

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The job scheme will cover the cost of wages, backdated to March 1 and will be open for a period of three months initially.

The scheme will be reviewed during that time and potentially extended for longer if necessary.

Mr Sunak added there is “no limit” on the funding amount available for the scheme.

He hailed the scheme as unprecedented saying “we have never had a scheme in our country like this before”.

The scheme is being built from scheme and will be put online by the HMRC once it has been completed.

How does it work?

The HMRC is currently working urgently to set up a system for reimbursement.

You have to designate employees as furloughed workers and then you notify your employees of this change.

Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

Once the new online portal is live, you must submit information to HMRC about the employees who have been furloughed and their earnings.

Once the system is in place, officials will confirm details on the coronavirus business support website here.

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How long do you have to have worked at a company to be eligible?

All employees in the UK who are recipients of a salary via a pay as you earn scheme are eligible for the scheme.

This includes public sector workers, local authorities and charities.

Currently, the HMRC is working on the specific conditions for the scheme.

However, it is not thought that one’s eligibility is contingent on their employment duration at a firm.

Do companies have to pay the remaining 20 percent of a worker’s salary?

No, the Treasury has been very clear on this point as over the weekend several companies expressed dismay at the prospect of having to cover this amount saying they would still need to lay off employees to meet this amount.

Companies should pay 80 percent of workers’ wages up to £3,125 which equates to a gross salary of £2,500.

Companies are able to top up pay levels to 100 percent if they wish, but they will not be able to claim more than 80 percent.

If your salary is reduced as a result of these changes, you may be eligible for further support, including Universal Credit.

Could the job retention scheme be open to fraud?

Authorities have said companies will not be able to claim too much money because applications for grants can be cross-checked against PAYE records for each company.

Companies will be required to make one claim for the entire workforce, record how many workers are covered and will need to keep records.

Officials have said they are prioritising offering financial support over fraud prevention.

But have added it would be easy to monitor large companies.

Do you have any questions about the coronavirus, self-isolating or the Government lockdown?

Get in touch with us and Express.co.uk will ask an expert to find the answers for you. Email your question to vickiie.oliphant@express.co.uk

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