CORONAVIRUS – latest update 06/04/2020
ADVICE FOR EMPLOYERS – STAY AT HOME
Firstly, please make sure all your employees understand the UK Government’s instructions to all individuals that they should NOT GO OUT AND SHOULD STAY AT HOME unless:
- To shop – for essential necessities such as food, health reasons or medicine
- To exercise – once per day but MUST maintain social distancing – it is worth noting that the conduct of a number of members of the population recently in disregarding this instruction may mean that collectively the country may suffer a longer period of restriction, and potentially tighter restrictions on movement
- To go to work – because your work cannot be done from home AND you are in an industry that has not been forced to close on the instructions issued by the UK Government OR you are a “Key Worker” and are required to go to work.
In addition; wash your hands frequently and maintain social distancing at all times!
UK Government Update on the Coronavirus Job Retention Scheme
On Saturday 4th April 2020 the UK Government issued an update to the “Coronavirus Job Retention Scheme” (CJRS) providing some additional clarity around eligibility and some other key points of note. Based on the latest information to date, this bulleting highlights the main points but the full update can be found here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Who is eligible – Companies?
If you cannot maintain your business operations as a result of Covid-19 you can furlough your employees provided:
- You are a company, charity, recruitment agency, business or public authority so long as you have a created and started a PAYE scheme before 28th February 2020
- You MUST have enrolled or be using PAYE online – if you aren’t then you need to apply via the link here: https://www.gov.uk/paye-online/enrol note this may take up to 10 days to activate
- You need a UK bank account
Who is eligible – Employees?
The key factor for eligibility is that the individual is paid via PAYE AND was on payroll on or before 28th February 2020. If this applies, then the following are eligible:
- Full and part-time employees, those on casual (varied/flexible) hours, agency workers, limb (b) workers and foreign nationals working in the UK
- “Shielding” employees – these are the employees who have been instructed by NHS that they MUST stay at home for 12 weeks – they will be able to provide you with documentation to prove their eligibility
- An employee who has two jobs and may be treated differently by both/either
- Nannies – so long as they are paid via PAYE
- Salaried members of Limited Liability Partnerships (LLPs)
- Company Directors – based on what is transacted via payroll and based on them doing minimal duties under the Companies Act 2006 and is phrased as “no more than reasonably necessary for that purpose”
- Those with “carer” responsibilities such as an employee who cares for someone with a disability or to look after children – however the guidance states that they can be, not that they must be furloughed
- Apprentices – although in simple terms, this is based on you being able to either defer their assessment or where you can continue to provide online training link: https://www.gov.uk/government/publications/coronavirus-covid-19-apprenticeship-programme-response/coronavirus-covid-19-guidance-for-apprentices-employers-training-providers-end-point-assessment-organisations-and-external-quality-assurance-pro
Note that HMRC has also clarified in this latest update that; “if contractually allowed, your employees are permitted to work for another employer whilst they are on furlough”. However you may wish to consider that such an employee who is a full time worker receiving 80% of their salary is not available for work if and when you require them to return, and is potentially preventing an employee who is not eligible for furlough or benefits from gaining employment.
As an employer you may also be able to find and agree volunteering work on or on behalf of your organisation, so long as it does not provide a service to or generate revenue for the company and provided it follows appropriate public health guidance.
Employees may also be furloughed multiple times, provided each period of furlough lasts at least 3 consecutive weeks.
Who is NOT eligible – Employees?
A number of employees are NOT eligible and you will not be able to claim for them through the CJRS as below:
- An employee commenced working for you on 1st March 2020 or later
- An employee who is furloughed for less than 3 weeks
- An employee who is on sickness absence, maternity, paternity or shared parental leave – as normal statutory payments apply in these circumstances
- An employee who carries out any work or services on behalf of the employer even if they get a top up, where the services and/or work generates revenue for the company – although they may take part in volunteering or training
- A self-employed worker – instead they should claim via the “Self-Employment Income Support Scheme link: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
When Can I Claim?
- Latest expected date for being able to access the HMRC Portal is the end of April 2020
What Can I Claim?
- Where an employee is “furloughed”, you will be able to claim for a grant of 80% of wages (up to a max of £2,500) per employee per month from HMRC
- You may also claim for 80% of the Employer’s National Insurance contributions you would pay on these wages AND up to 3% of the auto-enrolment pension contributions
- You cannot claim for any “top up” of salary
- You cannot claim for tips, commissions, bonuses unless these are “regular payments” you are obliged to pay to your employees
How do I claim?
- You need the following information
- your ePAYE reference number
- the number of employees being furloughed
- the claim period – start and end dates
- the amount claimed (subject to a minimum 3-week period)
- your bank number and sort code
- your contact name
- your phone number
- You are expected to continue to pay employees wages as the grant is a reimbursement of wages paid to furloughed employees
- Calculate the whole payroll for furloughed employees allowing for pro-rata calculation for part-time and casual hours workers plus employer’s NI and 3% pension contributions – this will be at 100% before Tax
- Work Out 80% of this amount
- Run Payroll at 80% and pay wages – note employees’ wages remain subject to normal Tax and N.I. deductions on the 80%
- Designate employees as “furloughed” when the HMRC portal is active
- Claim a single total amount back
- There are three different calculations depending upon the employee’s status
- Full and part-time employees
- use the employee’s salary (before tax) as of 28th February
- Variable Pay employees if employed for more than 12 months
- use the same month’s earnings from the previous year OR
- use the average monthly earnings for the 2019-2020 tax year
- Variable Pay employees if employed for less than 12 months
- calculate their average monthly earnings and claim 80% from when they started working
- if they only started in February 2020 then calculate a pro-rated amount and claim 80% of that
- Full and part-time employees
- DON’T FORGET when calculating wages to apply the annual National Minimum Wage/National Living Wage increase – and yes you may pay an employee less than the NMW/NLW unless they are carrying out training in which case you must make up the shortfall yourself – note you cannot claim this amount back
- You MUST pay your employees ALL the grant you have claimed for them
- Remember you will still need to pay any Tax and National Insurance contributions on what you pay your employees
- You cannot use any grant money to offset redundancy payments
- Note the scheme is currently available from 1st March 2020 for 12 weeks unless extended by the Government
Key Points to Note:
HMRC reserve the right to both retrospectively review and audit your claim after the scheme ends and will continue to monitor companies after the scheme has closed, so please ensure you are claiming only what you are entitled to.
This advice is being reviewed and updated regularly and is currently in line with Government and ACAS guidance as updated 4th April 2020.
Should you require any further advice or guidance please call us on our usual HR number of: 01325 488425 or email: firstname.lastname@example.org