CORONAVIRUS – latest update 27/03/2020
ADVICE FOR EMPLOYERS
How to Claim through the Job Retention Scheme
The good news is that late last night (26th March 2020) the Government finally published the rules surrounding how to, and who is eligible as employees under the Coronavirus Job Retention Scheme for reimbursement of the 80% of wage costs (up to £2,500) per person per month. The rules around the self-employed is also mentioned below also so you can discuss this with any of your contractors that you may use within your business.
For the full Government information please see here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Here are some key points to help you navigate through this:
- This is a Job Retention Scheme
The Coronavirus Job Retention Scheme is just that and is primarily there for business owners to claim 80% of wage costs (up to £2,500) per person per month. To be able to claim for your employees, then under normal circumstances you would be considering laying them off or making them redundant.
This is really important as the Government made it clear that employees must stay at home UNLESS their job required them to be at work, in which case they should travel to work and you should ensure their safety through hygiene methodologies and social distancing.
You must therefore be sure that your reasons for placing them under the scheme is as an alternative to making them redundant or laying them off.
See previous bulletins around the various scenarios for employees.
Once the HMRC Portal is active there will be greater clarity on whether certain industries that could and should have continued working will be eligible for reimbursement. It cannot be stated enough that this is a Job Retention Scheme, not a “… the UK Government will pay everybody’s wages at 80% scheme”!
- Can I claim for every employee?
Only if they are eligible for the Job Retention Scheme.
You should wherever possible consider whether your business can continue to operate such as an online service, takeaway food (within public health guidance), or utilising employees working from home.
In addition if you have employees who are on sick leave; or on maternity leave, adoption leave, paternity or shared parental leave; or on unpaid leave (unless placed on this after 28th February 2020); or working from home; or on reduced working hours; then they are not eligible and should be paid the normal rates of pay accordingly.
If they are an employee who is “shielding” in line with public health guidance, then they can be placed on furlough. This is an employee who has been instructed that they must self-isolate for 12 weeks as they are part of the most vulnerable group. For further information see here: https://www.gov.uk/government/publications/guidance-on-shielding-and-protecting-extremely-vulnerable-persons-from-covid-19/guidance-on-shielding-and-protecting-extremely-vulnerable-persons-from-covid-19
- Which employees are eligible?
For the company to be eligible then you must be a UK employer that had created a PAYE payroll scheme prior to 29th February 2020.
If so then the scheme applies to any employee, full or part-time, on agency contracts or casual hours contracts.
You must furlough employees for at least a continuous 3-week period before the reimbursement for these employees is claimable.
However, any employee who started employment after 28th February 2020 is not eligible to be furloughed and you cannot claim for them under this scheme.
You may if you so wish, continue to pay them; or they may be payable under SSP or other statutory allowance; and they should apply for Universal Credit, for which they may or may not be eligible.
- What can I claim?
Wages of 80% (up to a maximum of £2,500) per eligible employee per month.
In addition you can also claim the Employers National Insurance Contribution and minimum automatic enrolment employer pension contribution (more detail to follow from HMRC later).
For full and part time employees:
The actual salary before tax as of 28th February 2020 should be used to calculate the 80% you intend to claim back.
Note that fees, commission and bonuses are not included in the reimbursement, but you must check your contracts of employment as to whether these are still payable, but obviously these would not be claimable under the scheme.
For casual hours employees:
You can claim for the higher of either:
- The pay earned by them during February 2019, or
- You calculate the average monthly earnings from the 2019-2020 tax year.
For clarity, any top up salary or above mandatory contributions for pension or bonuses will not be reimbursed.
- Do I still have to pay my employees as normal?
The UK Government expects that you will continue to pay your employees through normal payroll.
The purpose of deferring the VAT quarter (still payable before April 2021) and offering grants and loan facilities, is to allow you to pay your employees’ wages and be reimbursed for these, albeit at a reduced rate. If you fail to pay wages to an employee you may be liable for an Unlawful Deduction of Wages claim.
From the date they are furloughed until the date they return to work (a minimum of 3-weeks), you may pay them a reduced amount of 80% of wages (up to a maximum of £2,500) per month.
Note that Tax and National Insurance is payable on the reduced amount, as are automatic employer pension contributions.
- What do I need to be able to claim?
Now is a great time to start preparing for when the HMRC Portal is activated.
You will need the following information:
- 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. It is expected that this will occur, so be sure of what you are claiming and that you have the right to do so.
- Can I have some employees furloughed and some working?
Yes, you need to determine how best to prepare your business to operate during this period and if at all possible, should continue to trade and generate revenue.
You will have overheads in your business and may need to generate some revenue or apply for grants or loans to cover these.
Where you have employees working from home or on short-time working (reduced hours) or on SSP or other statutory benefit, then you are responsible for paying them as normal as per their contract of employment.
Where you determine that some employees are eligible to be furloughed, then you need to consider if they were employees who in normal circumstances would have been laid off or be considered for redundancy.
Therefore, this may not be the whole workforce and so some sort of selection is required however, you do not need to undergo a formal redundancy process, but should consider who are the best people or most essential people you need to retain working while the restrictions are in force. Be aware that you do not breach any rights in respect of equality and discrimination when selecting people to be furloughed.
- Can employees take holiday whilst on furlough?
No they can’t and it is important to note that employees continue to accrue holiday entitlement during the period of furlough.
Also note that employees cannot carry out any work that generates ANY revenue for the company.
Employees can however carry out training during this period or volunteer.
In respect of taking holiday during the crisis, an employee who is on sick leave, maternity, paternity, parental leave, or working from home, may request (and if approved be paid for) accrued holiday entitlement. It remains your decision whether to grant this or not.
- Things to be aware of
Although every employer is eligible to make a claim, you may not be able to claim for every employee who is on your payroll, as not every employee may be eligible.
Although this is a Job Retention Scheme, if when the scheme is ended by the Government, you will need to decide if employees can return to their normal duties and if not then termination of employment, or a change of their employment contract may be necessary.
You must follow employment law in respect of any decisions you make.
All employees who are furloughed continue to be entitled to their statutory and contractual rights.
Please refer to the earlier Guidance Update for some scenarios to determine your employees’ current status.
Last night (26th March 2020) the Government also announced the plans to support self-employed individuals affected by the Coronavirus pandemic.
The details are not overly detailed and further information will be circulated when available from HMRC.
Here is the latest link: https://www.gov.uk/government/news/chancellor-gives-support-to-millions-of-self-employed-individuals
For the moment, this is the advice we have:
- You must already be self-employed but does include partners in partnerships.
- More than 50% of your income must come from self-employment.
- Do not contact HMRC – they will contact you if you are eligible.
- If you have suffered a loss in income, a taxable grant will be paid to you based on 80% of your profits capped at £2,500 per month.
- This will be for an initial 3-months and will be paid in one lump sum starting in June, under the “Coronavirus Self-employed Income Support Scheme”.
- The scheme is open to anyone earning less than £50k in 2018-19, or an average trading profit of less than this from 2016-17, 2017-18 and 2018-19 (3-years accounts).
- Note that if you are recently self-employed and haven’t filed a tax return for 2018/19 you are not eligible.
- If you are yet to file your 2018/19 return you have a 4-week window to get this filed.
- The new scheme is on top of the current 6-month deferral of the July payment on account.
However, those who pay themselves a salary and dividends through their own company are not covered by the scheme but will have 80% of their salary covered by the Coronavirus Job Retention Scheme if operating through PAYE and are furloughed.
- Coronavirus Job Retention Scheme – HMRC will set out further details on the information required.
- Deferring VAT and Income Tax payments – This is an automatic offer with no applications required, businesses will not need to make a VAT payment during this period.
- Statutory Sick Pay relief package for SMEs – A rebate scheme is being developed and Further details will be provided in due course once the legalisation has passed.
- 12-month business rates holiday for all retail, hospitality and leisure businesses in England https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/873622/Expanded_Retail_Discount_Guidance.pdf
- Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief – you do not need to do anything. Your local authority will write to you if you are eligible for this grant.
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000 – You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
- Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank – https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
- Covid Corporate Financing Facility (CCFF) – a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans – https://www.bankofengland.co.uk/markets/market-notices/2020/ccff-market-notice-march-2020
- HMRC Time To Pay Scheme – call HMRC’s dedicated helpline: 0800 0159 559.
The below link is the Gov.uk overall guidance in respect of this matter which will be updated by the Government as things develop.
This advice is being reviewed and updated regularly and is currently in line with Government and ACAS guidance as updated 27th March 2020.
Should you require any further advice or guidance please call us on our usual HR number of: 01325 488425 or email: email@example.com