This post has been updated to 12:00 27/03/20
This post is a summary of the Coronavirus Job Retention Scheme( CJRS) – the detail can be found here.
Details on a ‘ furloughed’ employee can be found in our blog post.
Please note that HMRC have not yet issued the actual detail on how to claim below through their new Portal – this is expected to be ready by late April.
Businesses covered under the CJRS
Any UK organisation with employees (including businesses, charities, agency workers paid through PAYE).
The Employer’s PAYE payroll scheme must be started before 28th Feb 2020 and have a UK bank account.
The Scheme starts from the 1st March for 3 months
It is designed to support Employers who have had to stop work due to Coronavirus and have ‘furloughed’ Employees after the 1st March
An Employee cannot work during this ‘ furloughed’ period , even on reduced hours.
Whose wages are covered?
- Employees who have been ‘furloughed’ on or after the 1st March, who were on PAYE payroll on 28th Feb 2020.
- Those who were made redundant since 28th Feb 2020 and have been rehired.
- Employees on agency contracts who are not working, but were on the PAYE payroll of the Agency on the 28th Feb 2020
They can be:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
– Employees hired after 28 February 2020 cannot be furloughed or claimed for.
– Employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
– 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 SSP and can be furloughed after this.
The grant under the CJRS
Employers will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month even if, based on their usual working hours, this would be below National Living Wage/National Minimum Wage.
They will also get the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
If the employee:
- has been employed for 12 months prior to the claim, you can claim for the higher of either:
- the same month’s earning from the previous year
- the average monthly earnings from 2019-20 tax year
- 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
While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.
What you’ll need to make a claim:
- If Grampian Accounting does your Payroll we will need the following:
- List of the Employees that you have ‘furloughed’ and sent letters to
- The start date for each period of ‘furlough’, per employee (and eventually the end date to stop the claim)
- Confirmation if you wish to top-up the 20% for each Employee or not (this is not for the claim but to enable us to run the correct payroll)
Please send in the above as per your usual manner and instruct us to complete the claim.
If you prepare your own Payroll, if you go to this link you will see all the details that you require for the claim.
What you need to do
- Decide which employees are to be furloughed and write to them to inform them of this. Remember to decide if you are topping up the additional 20% to full pay which ahs to be noted in the letter. You will be unable to claim unless this is done.
- Seek legal support if needed
- If you are doing your own payroll, then calculate the amount you are able to claim for your furloughed employees, including Er’s NI contributions and a minimum automatic enrolment employer pension contributions that they can claim.
- If you are doing your own Payroll apply through the portal (more information required regarding this Portal)
As always, if you require any help, please let us know.