Coronavirus Job Retention Scheme
This blog post is covering a key summary of the Coronavirus Job Retention scheme as well as frequently asked questions.
What is it
The Coronavirus Job Retention scheme has been designed to give Employers support towards Employees whose roles are temporarily not required because of the impact of coronavirus on their business.
The scheme is initially open for three months and extension will be considered in May.
Full details can be found on the following link:
Who is eligible?
Any UK employer can claim that had a PAYE scheme in place on or before 28th February 2020 and have a
UK bank account.
Which employees can you claim for?
To qualify for the scheme employees must have been on the payroll on 28th February 2020.
What does furlough mean?
Furlough means laid off, when an employee is furloughed, they cannot do any work for the employer.
How do I furlough someone?
This depends on the contract of employment and we would recommend you taking HR advice. If there is a clause in the contract that says you can lay employees off or make them stay at home you can write to employees to notify them.
If there is no such clause then you need to agree it with the member of staff. We can provide a template agreement if necessary. It is unlikely that the employee will disagree as the other option is redundancy.
You will need to furlough an employee for a minimum of 3 weeks.
How much can I claim?
Employers can claim up to 80% of a furloughed employees’ wage costs up to £2,500 per month plus employer NI and pension costs.
How do I claim?
Claims will be made through an on-line portal which is due to be available by the end of April 2020.
The following information will be needed:
· 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
Can Directors Claim under the scheme?
Directors can make a claim under the scheme, but they can not undertake any work beyond their statutory duties. Statutory duties are very limited so in most cases a claim is unlikely.
Can I put through a higher salary to increase the 80%?
No, despite the fact that this is fraud the scheme is based on February’s payroll, which will of already been submitted and recorded at HMRC.
Do I have to pay the additional 20%?
Employers can voluntarily pay the 20% top up if they wish to, this is optional and if you do choose to pay this HMRC will only reimburse the 80%.
Do I have to pay minimum wage?
No, minimum wage does not apply as the employee would not be working. If the employee is undertaking training during this period they must be paid at least the national minimum wage for the time spent training.
What about employees on an hourly rate or zero hour contracts?
These employees can be furloughed and the claim under this scheme if for the higher of either:
· the same months earnings from the previous year
· average monthly earnings for 2019/20
If the employee started in the 2019/20 tax year the claim is for the average earnings since commencing employment,
If the employee started in February 2020 then the claim is based on pro-rata earnings.
Can I furlough employees on maternity?
Employees on maternity are subject to the normal rules, and these must be applied. A claim can be made under the scheme if you offer enhanced pay as part of woman’s maternity package.
Can I furlough employees that are off sick?
No, their reason for absence from employment is sick leave but they can be furloughed when they return to work.
Do I still have to pay tax or NIC?
Yes, payroll still has to be run as normal, with tax NI and pensions applied. If you are struggling to make the payment to HMRC you can contact them on the time to pay helpine.
Can I back date furloughing?
It is best to take advice with regards to this. An employee needs to be furloughed from the date they stopped working for you, so for example it could be back dated if you had previously made an employee redundant and then re-hired them.
Do I have to repay the money bank to HMRC?
No, it is a form of grant to is not repayable.
Is the money taxable?
Like most grants the income is taxable, but then tax relief is given on the expenditure i.e staff costs.
Can I temporarily un-furlough someone?
The minimum time an employee can be furloughed is 3 weeks, you can un-furlough a member of staff and then furlough them again.
Can employees take an additional work?
That depends on the nature of your contract so best to seek legal advice, but they can volunteer while on furlough. As long as they are not providing services to generate revenue for, or on behalf of your organisation.
Does holiday pay accrue?
Yes, as employees still have the same employee rights as before.
What about employees with reduced hours?
These would not be designated as Furloughed so no support it available under this scheme.
If you need any help please get in touch firstname.lastname@example.org or 01952 462693
Above all else stay safe!