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COVID-19 - Employment Law Update 2: Self Employment and Furlough Leave


The Government announced on Thursday 26 March 2020 that they will be providing grants to all those who are self-employed and are eligible up to the value of £2,500 per month under the Self-Employment Support Scheme.

The grant is not a loan and will not have to be paid back.  However, not all those who are self-employed will be eligible.  The Government has stated that the scheme will cover 95% of those who are self-employed.  In order to be eligible for the scheme trading profits for 2018-19 will need to be under £50,000 or the average of three years from 2016-2019 needs to be under £50,000.  For those people who have not submitted their tax return by the deadline of 31 January 2020 and still have not done so, they will be able to submit a tax return for 2019 over the next four weeks. For those who are eligible more than 50% of their income needs to be from self-employment. 

Currently those who are self-employed can continue to work if it is safe to do so and still be eligible for the grant.  Payments are expected to commence by the end of June due to the complexity involved of administering the scheme.  The Government has asked for those who are self-employed not to contact them but HMRC will contact direct the individuals who are eligible over the coming months.

The scheme is intended to run for three months but this is subject to extensions that the Government may wish to make. 

Update on Coronavirus Job Retention Scheme (Furlough Leave)

The Government has provided further guidance in relation to Furlough Leave.  All UK employers that had a PAYE scheme in place on 28 February 2020 can apply for the scheme.  Those employers who are eligible can claim up to 80% of wage costs up to £2,500 per month in addition to the associated costs of the employee e.g. NIC’s and minimum auto enrolment pension contributions.  However fees, commissions and bonuses cannot be claimed.

To be eligible for Furlough Leave the employee must have been on the payroll on 28 February 2020.  They cannot undertake any work for the employer whist on Furlough Leave but can do voluntary work or training as long as the employer does not profit from this and the employee does not conduct any service for the employer.  Anyone who was made redundant after 28 February 2020 can be re-hired and then placed on Furlough Leave.  Employers can apply for Furlough Leave to be back dated to 1 March 2020.  However employees must be placed on Furlough Leave for a minimum of three weeks and providing that each employee is placed on Furlough Leave for three weeks then staff may be rotated on and off Furlough Leave as required. 

Employers who are on sick leave or are self-isolating cannot be placed on Furlough Leave.  However they may be placed on Furlough Leave after their sick leave or self-isolation has ended.

For those employees whose earnings vary from month to month their employer can either can claim for the same month’s earning from the previous year e.g. income earnt in March 2019 or the employee’s average monthly earning in the tax year 2019 -20, whichever of the two is higher.

For those employees who only receive the national minimum wage they are still only entitled to 80% of their normal wages if they are placed on Furlough Leave, however they are entitled to receive the national minimum wage for any time spent training.

Disclaimer – The above facts are accurate as of 15:50 on 27 March 2020.

For advice on this, or any other employment matter, contact our employment team on 01905 723 561 or email: Guy.salter@smesolicitors.co.uk or Sonia.ali@smesolicitors.co.uk.

Added: 30 Mar 2020 09:51


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