At last we have the detailed information relating to the Coronavirus Job Retention Scheme.
The scheme is aimed at employers who would otherwise have to lay off employees because
· They had to close their business on Government instructions
· Business has slowed down and there are staff members who are not required to keep the business functioning.
The Government will create a portal where you will upload information about employees you have furloughed. You can then recover 80% of their salary costs up to £2,500 per employee. You can also recover the employers’ NIC contribution and the minimum 3% employer pension contributions. This is more generous than we had anticipated.
All employers who had created and used a PAYE scheme before 28 February 2020 and there are no restrictions on the type of business than can apply, so charities, partnerships, agencies who employ workers and of course sole traders who employ staff.
Who doesn’t qualify?
If you have an annual scheme set up before 28 February but not yet used, then you won’t qualify.
Which employees qualify?
You can furlough any employee who isn’t immediately required for the operation of your business during the Coronavirus outbreak. They can be:
· Full time
· Part time
· On agency contracts
· On flexible or zero hours contracts
You can also re-employ any employee you made redundant in anticipation of coronavirus downturn. This will not only assist the employee but also the system as they will not have to apply for Universal Credit which is currently overloading the DWP.
What is a furloughed Employee?
If you furlough an employee, they cannot do any work for you at all. If they are an agency worker, they cannot do any work at all.
If you decide to reduce staff hours, then they are NOT furloughed, and you must pay their salary as normal. You may only use this scheme to recover the costs for employees who are NOT doing any work for you.
If you have staff who were on unpaid leave before 28 February 2020 you may not furlough them.
Staff on Statutory Sick Pay may be placed on furlough once their self-isolation or sickness period has expired, and staff who are required to shield due to pre-existing conditions can also be placed on furlough.
What do I need to tell the furloughed staff?
You are changing their terms and conditions and so you should negotiate and discuss furloughing with your employees and ensure if not all employees are being furloughed that it is done with regard to equality and discrimination law. You should also give them a letter confirming they are furloughed and keep copies of all correspondence.
Staff on Maternity Paternity and Adoption Leave
There are no significant changes to the statutory maternity pay provisions but of you offer enhanced maternity pay, over and above SMP you may claim this element via the portal.
The paternity and adoption leave schemes mirror the maternity scheme.
How do I claim?
You can recover the lower of £2,500 or 80% of basic gross pay plus the minimum employer pension contribution and national insurance. You cannot include bonuses or commissions or other fees. The basic gross salary should be that as at 28 February 2020.
What if an employee is paid a variable wage?
If someone has been employed for at least 12 months you should use the higher of:
· The same month’s earnings for the previous year
· The average monthly salary for 2019/2020
If you do not have a 12-month employment period then use the average for the period of the employment.
If they started in February use a pro-rata amount.
What is 80% takes an employee to below National Minimum Wage?
NMW/NLW does not apply as the employee is not actually working. However, if you require employees to do training while on furlough, they must be paid at the appropriate rate for the hours worked.
Can I deduct an admin fee for processing what is essentially a state benefit?
No, you must pay your employee the full amount due to them, you may only deduct the usual statutory deductions. You cannot charge a fee.
How do I treat the grant in my accounts?
The grant is a taxable replacement for income you will lose due to Coronavirus. It should be included as income in your business accounts.
If we operate your payroll then we will have most of the information required to make the claim all you will need to give us is the names of the employees, you wish to furlough.
Once each claim has been made via the portal the repayment will be made to your UK bank account, so we will also require the sort code and account number and name.
Best wishes and stay safe
K M Business Solutions Limited
The Association of Charity Independent Examiners
Registered Company Limited by Guarantee 7461134Registered in England at1st Floor, Block C, The Wharf, Manchester Road Burnley BB11 1JG
Registered Charity in England & Wales No: 1139609
Registered Charity in Scotland No: SC039066
Telephone: 0131 659 9751 or 07899 891616 Email: firstname.lastname@example.org
Address: 19 Windsor Place Edinburgh EH15 2AJ