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COVID-19: Job Retention Scheme - further information

COVID-19: Job Retention Scheme - further information

April Foster

The government have released further updates for the job retention scheme including confirmation that office holders, directors and salaried members of LLPs are eligible for the scheme and provides further information on what should be included in the calculation of monthly earnings.

Company directors
Key points:
  • A decision to furlough a director should be formally adopted, noted in the company records (we suggest a minute) and communicated in writing to the director.  Please see our template letter
  • Furloughed directors may only carry out their statutory duties; they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provide services to or on behalf of their company.
Salaried members of LLPs
Key points:
  • Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.
  • To furlough a member, the terms of the LLP agreement may need to be varied by formal agreement.  It will need to reflect that the member will not perform any work in the LLP during furlough and the effect on their remuneration.
  • Salary is referred to as profit allocation, excluding performance related amounts.
Past overtime, fees, commission, bonuses and non-cash payments
The following extract is from the government guidance: 

“You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.”

If your employee undertakes training
Furloughed employees can engage in training, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation. Furloughed employees should be encouraged to undertake training.

Where training is undertaken by furloughed employees, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours.

However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages (see National Minimum Wage Section in the link below for more details).

Further detailed government guidance can be found here

For further advice on the job retention scheme or any other support measures available to businesses in response to the coronavirus crisis, please contact your local Moore adviser.