27 Mar Coronavirus Job Retention Scheme for Employers
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. The government expect the scheme to be up and running by the end of April 2020. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).
Business Who Are Eligible
Any UK organisation with employees can apply, including:
• recruitment agencies (agency workers paid through PAYE)
• public authorities
You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
Employees Who Are Eligible
Furloughed employees must have been on your PAYE payroll on 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
To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation.
Employer National Insurance and Pension Contributions
All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
You can claim a grant from HMRC to cover wages for a furloughed employee, equal to the lower of 80% of an employee’s regular salary or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
Work out what you can claim
Employers need to make a claim for wage costs through this scheme.
At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
We will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.
Full time and part time employees
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.
Employees whose pay varies
If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
• the same month’s earning from the previous year
• average monthly earnings from the 2019-20 tax year
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
What you’ll need to make a claim
Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.
To 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
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
Putting Employees on Furlough
Employers will need to designate affected employees as furloughed workers, and notify their employees of this change.
They must note that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. This means that in the absence of any contractual rights to the contrary, employers would be wise to seek agreement from staff about furloughing before doing so.
We recommend all employers seek advice from employment and HR legal specialists before going through this process and our template furlough letter should be used in accordance with applicable employment law and legal guidance. Infinity Partnership takes no responsibility for the use of the basic template letter provided.
For more details on this including for employees who are on leave, statutory sick pay or maternity pay please see full guidance available here