Guidance on the coronavirus Job Retention Scheme
Guidance for employers on the coronavirus Job Retention Scheme.
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020.
Employers can use a portal to claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus Employer NIC and minimum automatic enrolment employer pension contributions.
Who can claim
You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
Employees you can claim for
Furloughed employees must have been on your PAYE payroll on 28 February 2020. The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
To be eligible for the subsidy, when on furlough, an employee cannot undertake work for or on behalf of the organisation. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.
Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are deciding who to offer furlough to, equality and discrimination laws will apply in the usual way. You are advised to seek legal advice from us regarding this.
Employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
Employees hired after 28 February 2020 cannot be furloughed or claimed for.
Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.
If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.
A furloughed employee can take part in volunteer work or training, as long as they do not provide services to or generate revenue for you.
If your employee is on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay
Different rules apply – contact us for more information.
What can you claim?
You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus Employer NIC and minimum auto enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
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.
More guidance on how employers should calculate their claims for Employer NIC and minimum auto enrolment employer pension contributions will be provided before the scheme becomes live.
Employees whose pay varies
If the employee has been employed 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.
If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
Employer National Insurance and Pension Contributions
Employers remain liable for associated Employer NIC and minimum auto enrolment employer pension contributions.
You can choose to provide top-up salary in addition to the grant. Employer NIC and auto enrolment contribution on any top-up salary will not be funded through this scheme. Nor will any voluntary auto enrolment contributions above the minimum mandatory employer contribution.
National Minimum Wage
Individuals are only entitled to the National Minimum Wage (NMW) if they are working. NMW does not apply to payments made to Furloughed staff unless they are required by you to undertake work related training.
What you’ll need to make a claim
To claim, clients should contact us with
the number of employees being furloughed
the claim period (start and end date)
We can calculate the amount of your claim. HMRC will retain the right to retrospectively audit all aspects of your claim.
Claims can be backdated to 1 March if applicable.
What happens after you’ve claimed
Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.
When the government ends the scheme
When the government ends the scheme, you must make a decision, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).
Employees that have been furloughed
Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay, maternity rights, rights against unfair dismissal and to redundancy payments.
Income tax and National Insurance
Income tax, NIC and auto enrolment contributions on qualifying earnings apply as normal.
Tax Treatment of the Coronavirus Job Retention Grant
Payments received by a business under the scheme are treated as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes