27 Mar 2020
HMRC publishes details of Coronavirus jobs scheme
HM Revenue and Customs has published full details of how companies can claim staff wages under its new Coronavirus Jobs Retention Scheme.
You can view the full guidance by clicking here.
Before you do, here is a summary of the key points from our Employment Law team.
When will the scheme pay out?
The Government expect the scheme to be up and running by the end of April.
Which businesses qualify?
Any UK organisation that had a PAYE payroll scheme on or before 28 February 2020 can use the job retention scheme. This includes recruitment agencies where their agency workers are paid through PAYE.
Which employees are covered?
Furloughed employees must have been on the payroll on 28 February 2020 and can be full-time employees, part-time employees, employees on agency contracts or employees on flexible or zero-hour contracts.
Employees must be furloughed for a minimum of three weeks.
The employee cannot undertake any work for the organisation. They can take part in volunteer work or training as long as it does not provide services or generate revenue for the employer. If workers are required to complete online training courses whilst furloughed, they must be paid at least the national minimum wage for the time spent on this, even if it is more than 80% of their subsidised wage.
It does cover agency workers but only those who are not working.
If an employee is on reduced hours or pay they will not be eligible for the scheme.
What is the relationship with SSP (Statutory Sick Pay)?
Those who are on sick leave or self-isolating should get SSP but can be furloughed after. Employees who are ‘shielding’ in line with public health guidance can be placed on furlough.
How does it work for people with more than one job?
If your employee has more than one employer, they can be furloughed for each job and the cap applies to each employer individually.
Payment
Employers will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2500 per month, plus the associated employer NICs and minimum pension contributions. The government will be releasing more information on this.
Employers must pay their employee the lower of 80% of their regular wage or £2,500 per month at a minimum.
Calculating Pay
For full-time and part-time employees their actual salary, as of 28th February, should be used not including fees, commission or bonuses.
For those on variable hours, where the employee has been employed for a full 12 months prior to the claim, the employer can claim the higher of the same month’s earnings from the previous year or the average monthly earnings from the 2019-2020 tax year.
If the employee on variable hours has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
Once an employer has calculated their salary that can be claimed for, they must then calculate the employer NICs and automatic enrolment pension contributions they can claim.
Making a Claim
Employers will need:
• ePAYE reference number
• number of employees being furloughed
• claim period
• amount claimed
• bank account number and sort code
• contact name
• phone number
Employers can only make once claim every 3 weeks which is the minimum length of time an employee can be furloughed for.
Income Tax and Employee NICs
Wages of furloughed employees will be subject to income tax and NICs and they will pay automatic enrolment contributions unless they have opted-out of the pension scheme.
Employers are liable to make these payments and deductions.
Past Employees
Employees who were made redundant since 28th February and are subsequently rehired by their employers are eligible for the scheme.
Furloughing Employees
Normal employment law considerations will apply including considerations relating to changing contractual terms and discrimination laws. The Government has also advised that where necessary, collective consultation may be required to make the changes.
Employment Law support for businesses
Our Employment Law team is standing by to answer questions from business owners looking to use the scheme to save jobs.