Coronavirus Job Retention Scheme Update 27 March

Key updates following the Chancellors announcements on Thursday 26 March

• The scheme is open to all UK employers for at least three months starting from 1 March 2020. We expect the scheme to be up and running by the end of April
• Employers can use the portal to claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated employer national insurance contributions and minimum automatic enrolment employer pension contributions. The total maximum grant being £2,803 per furloughed employee, per month
• The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020
• The minimum length of furloughing an employee is 3 weeks
• Employers in receipt of public funding for staff costs, and that the funding is continuing, It is expected that employers should use that money to continue paying staff in the usual fashion and not furlough them
• Furloughed employees must have been on your PAYE on 28 February 2020 in order to make the claim. Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme. You can refer to our previous blog on Payroll FAQs ‘What happened If I need to close the workplace’ for alternative options to consider for those employees
• You can claim the for any type of contract on your PAYE payroll, including:
  • Full-time employees
  • Part-time employees
  • Employees on agency contracts
  • Employees on flexible or zero-hour contracts
• The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer
• You do not need to place all your employees on furlough
• Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this
• If an employee has multiple employers they can be furloughed for each job, and claim the grant accordingly for each job
• A furloughed employee can take part in volunteer work or training as long as it does not generate revenue or provide services for on behalf of your organisation
• NLW/NMW is not applicable for furloughed employees. However, if they do any training whilst they are furloughed, they must be paid the equivalent of NLW/NMW
• Occupational maternity, adoption, paternity or shared parental pay is treated in the same way as claiming 80% for furloughed earnings
• The furloughed earnings are calculated using the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions. Fees, commission and bonuses should not be included
• Furloughed earnings are subject to Income Tax, National Insurance, and Pension contributions (if in the pension scheme) as usual
• For full-time and part-time salaried employees, the employee’s actual salary, as of 28 February should be used to calculate the 80% earnings
• For employees whose pay varies, and has been employed for a full twelve months prior to the claim, you can claim for the higher of either:
  • The same month’s earnings 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-rate for their earnings so far to claim
• It is the employer’s responsibility to make the claim. However, if we process the payroll for you, we can confirm the information you require on request. This includes:
  • PAYE 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
  • Calculated furloughed earnings, employer NI, and employer pension
• HMRC will review the claim and if eligible, pay it via BACS payment to your UK bank account

To help you understand how this works we have put some working examples together. Download here.