How The Job Retention Scheme Can Support Your Early Years Setting

Get 80% back on staff wages and avoid laying off your practitioners.

This article was updated March 27, to include changes, information, and FAQs that arised from the official government guidance on the scheme published here.

By now, you’ve probably heard about the government’s Job Retention Scheme, an initiative to prevent mass lay-offs and a promise to cover 80% of wages for staff that employers would otherwise have to let go.

Along with the announcement that the government will continue to pay out funded entitlements for 2, 3, and 4-year-olds, it increasingly looks like that the government is positioning itself to really support you through these difficult times.

But the scheme, announced on the 20th March, has still generated plenty of confusion around how exactly it will apply to early years providers.

That’s why I called up Early Years Alliance CEO Neil Leitch, to discuss what we know about the scheme, what we’re still waiting to hear, and to pass along some of your questions on what the scheme will mean for you.

Note: I spoke with Neil before the further guidance published on the 26th March.

What do we know about the Job Retention Scheme already?

“For the first time in our history, the government is going to step in and pay people’s wages.”

That was the promise of Chancellor Rishi Sunak as he announced the measures to the nation. But what exactly do we know so far?

Well, according to the official government guidance on the scheme, and the chancellor’s announcement:

  • You will be able to claim back 80% of a staff member’s wage, up to £2,500 a month, if you would otherwise have to lay them off due to the pandemic.
  • To do so, you will have to designate them as a furloughed worker, notifying them of this change in writing and keeping a record of that.
  • Staff cannot do any work for an employer while furloughed, defined as offering services or generating revenue. More on this in the FAQs below.
  • Furloughed staff must have been on your PAYE payroll on or by 28th February 2020.
  • Staff made redundant since that date can be rehired and furloughed under the scheme.
  • The minimum time a staff member can be furloughed for is 3 weeks, which is also the length of time you must leave between making claims with HMRC.
  • This will be done through an as-of-yet unreleased HMRC portal.
  • The Job Retention Scheme will cover the cost of wages backdated to March 1st, and will be open for at least three months, with an extension possible.
  • The first grants are expected to be paid within weeks, with the scheme fully up and running by the end of April.

“Coupled with the cover for 2-, 3-, and 4-year-old funding,” Neil Leitch explained to me, “sustainability hinges without a doubt for providers on this programme.”

With that in mind, it’s clear that this scheme is a call for employers like yourselves to stand behind your workers, and trust that the government will support you. Peter Cheese, the chief executive of CIPD, the trade body for HR professionals, has urged companies to “Hold their nerve while funds arrive”.

However, Neil did point out to me that this scheme means the government support available for childminders and smaller settings is still unclear. On 27th March, the government did, however, reveal a grant scheme for the self-employed to cover profits up to £2,500.

Early Years Alliance CEO, Neil Leitch
Why is the scheme so vital for early years providers?

It’s becoming increasingly clear that most early years providers can’t continue to employ all of their staff full-time during the part closures. That’s why government support is crucial to prevent parents from having to foot the bill.

“It varies in our nurseries,” Neil explains, “where some places have hardly any children and some have more. But it’s pretty obvious that we can’t continue to keep all of the services open and all of the people employed.”

What’s more, we already know the early years has massive recruitment issues and is, sadly, often undervalued. We can’t afford for staff to leave the sector during these months away. That’s why it’s more vital than ever that you can keep your staff employed, engaged, and ready to begin again once we return to some version of normality.

What are we still waiting to hear about?

The main concerns for early years providers right now rest on two questions: Who exactly qualifies, and what are the terms of the furloughed absence?

“If we are expected to be flexible in our response to supporting key workers and essential services,” Neil says, “then surely this particular initiative has to give us the capacity to be able to do that.”

That’s why there have been calls for early years providers to be able to un-furlough individual practitioners to keep up with changes in demand, without it changing the conditions of the scheme and what they can claim. That’s exactly why Neil explained to me that the Early Years Alliance are lobbying government to administer the scheme with some flexibility, and you can join their efforts by messaging your MP with their template letter.

“If the whole intention of the scheme is to provide job security for people but also support key and essential workers,” Neil points out, “then it seems hideous that we would be locked down into the rigour of procedure and terms and conditions.”

So as we hear more announcements about the scheme over the coming days, expect more clarity around the rotation of staff and the conditions of the furlough.

What are the unanswered questions?

We’ll try to bring you the answers to these unanswered questions and more in the coming days:

  • Can you rotate furloughed staff?
  • Now answered below Can you bring people back into work and then re-furlough as things change?
  • Now answered below Does the scheme apply to long-term bank staff?
  • Now answered below How long do staff have to have been with you?

Your questions on the Job Retention Scheme answered

We’ve been collecting questions on the scheme from our customers and online. Here, we’ve tried to answer some of the most important.

Is this a grant or a loan?

The scheme is a government grant, reimbursed to you once you have paid your staff. This means you won’t be expected to pay back this money at a later date.

If your business doesn’t have the cash flow to pay staff upfront, you can already apply for a Coronavirus Business Interruption Loan.

Claiming the money from HMRC

You will receive a grant through the HMRC portal to cover the lower 80% of an employee’s wages up to £2,500 plus the associated Employer National Insurance Contributions and minimum automatic pension contributions on that subsidised wages.

You can choose to top this up, but the NI and pension contributions for that top-up will not be covered.

The portal is not yet set up, but to make the claim you will need:

  • Your ePAYE reference number
  • The number of employees being furloughed
  • The claim period (start and end date)
  • Amount claimed (per the minimum length of furloughing of 3 weeks)
  • Your bank account number and sort code
  • Your contact name
  • Your phone number

What is the minimum time to furlough?

The minimum time you can furlough an employee is 3 weeks, which is also the length of time you must leave between making claims with HMRC.

That does, in theory, mean you could furlough employees in three-week chunks, and then reassess if things change, un-forloughing some employees or reapplying for others to maintain their furloughed status.

Who can I furlough? Can I furlough bank staff?

Furloughed employees must have been on your PAYE payroll on or by 28 February 2020, and can be on any type of contract, including:

  • Full-time employees
  • Part-time employees
  • Employees on agency contracts
  • Employees on flexible or zero-hour contracts

Does the scheme still apply even if we receive funded entitlements?

The DfE have confirmed that providers will be able to use the Job Retention Scheme and still receive funded entitlement money for children not accessing care as a result of the closures.

Can I furlough an employee on reduced hours?

No. If an employee is either on reduced hours or reduced pay they are not eligible for the Job Retention Scheme.

Can I furlough staff that have already been made redundant?

Yes, provided they were made redundant since 28 February 2020, and you then rehire the employee, that employee can then be furloughed.

Could furloughed workers volunteer to work or do training?

The guidance is clear that a furloughed employee can take part in volunteer work or training, provided that the volunteer work does not provide services or generate revenue for the organisation.

If you are requiring staff to complete training, then they must be paid at least the NMW/NLW for that time, even if this is more than the 80% of their subsidised wage.

Do I need to give non-furloughed staff full hours?

One potential difficulty with the scheme is that if you offer working staff reduced hours, those staying at home may end up getting a higher wage.

That’s why Neil recommended that you do what you can to ensure working staff get a full wage, and remember that you are able to be a little flexible with ratios during this time.

“I think most providers should utilise fully the staff that they do bring in,” Neil explains. “I wouldn’t look to cut anyone’s hours, but use fewer people and increase the hours per person.”

Which staff should be furloughed?

This is a question we’ve had in a lot, and we’re planning on covering it in its own piece over the coming days. But it’s important to consider things like which staff are most vulnerable to the illness, and ensuring that where possible you can have your most qualified staff in.

Other ways to support your business

The government has announced a number of initiatives to support businesses during these times. You can see the full measures over here.

  • 🇬🇧 The government will pay up to 80% of an employee’s wages if they would otherwise lose their job due to the coronavirus pandemic, up to £2,500. More details to come soon.
  • 🇬🇧 If you are registered for VAT for other services your provide or use, VAT will be deferred until the end of June, to be made payable at the end of the tax year.
  • 🏴󠁧󠁢󠁥󠁮󠁧󠁿 Chancellor Rishi Sunak confirmed that private childcare providers will also be able to defer their business rates for one year starting from April 1st.
  • 🏴󠁧󠁢󠁥󠁮󠁧󠁿 The government will continue to pay funding for ‘free’ childcare entitlements, even if nurseries close or children don’t attend. No announcements yet for Scotland 🏴󠁧󠁢󠁳󠁣󠁴󠁿 or Wales 🏴󠁧󠁢󠁷󠁬󠁳󠁿.
  • 🇬🇧 Statutory Sick Pay will be refunded by the government for businesses with less than 250 employees.
  • 🇬🇧 Businesses with a turnover of no more than £41m a year can apply for a Coronavirus Business Interruption loan of up to $5m, guaranteed by the government. This will launch next week.
  • 🇬🇧 Businesses can receive extra time to return taxes under the HMRC Time to Pay scheme.

Did we miss something? If you have other confusions or unanswered questions about the scheme, please email me at ma@famly.co.uk, and I will do my best to offer some clarity and answer your questions.

Learn more about Famly

Find out below from Neil Leitch about the impact of Famly at the Early Years Alliance, and see what we can do for you in a personal demo.

Neil Leitch from the Early Years Alliance explaining Famly's impact
“Every time I ask somebody, ‘How is the system going?’, the thing that always come back to me is that staff say ‘You should have done this a long time ago.'” – Neil Leitch, CEO, Early Years Alliance
Neil Leitch from the Early Years Alliance explaining Famly's impact
“I’d say this – every time I ask somebody, ‘How is the system going?’, the thing that always come back to me is that staff say ‘You should have done this a long time ago.'” – Neil Leitch, CEO, Early Years Alliance

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