30 Mar Furlough – Job Retention Scheme – What we know so far.
Coronavirus Job Retention Scheme – FAQ’s
EA ASSIST – PAYROLL
Our staff are currently working from home to ensure we continue to provide our payroll services. We will continue to work through year end procedures and provide support to clients in these unprecedented times. It has been a busy time for us and we know this will continue for the payroll department. If you need to get in touch the best way is to email us and we can call you back. Please email firstname.lastname@example.org with your enquiry and we will come back to you as soon as we can.
Keep up to date
Information is being updated regularly and we expect to see the HMRC portal for Furlough ready by end of April 20. Please keep up to date with information by visiting the websites below:
Furlough – What we know so far
What should you communicate to my employees?
Employers should discuss being furloughed with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication. This is a very important step. Write to your employees to ensure they understand what is happening and ask them to sign and return to you a copy of the letter.
How much am you entitled to claim?
80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage
What information will you need to make a claim?
To claim, you will need:
- your ePAYE 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
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
Who can claim the grant?
Any UK organisation with a PAYE payroll scheme which was setup on or before 28 February 2020.
Which employees are covered by the scheme?
Furloughed employees which must have been on your PAYE payroll on 28 February 2020, including:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
Also employees made redundant since 28 February 2020 are covered if they are rehired.
Employees must not continue to work for the organisation in any form whilst furloughed, if they do they will not qualify.
What if an employee is on unpaid leave?
Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
What if an employee is on Statutory Sick Pay?
Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.
Employees who are shielding in line with public health guidance can be placed on furlough.
If an employee has more than one job?
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.
Maternity Leave, contractual adoption pay, paternity pay or shared parental pay.
If your employee is eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and they are entitled to claim up to 39 weeks of statutory pay or allowance.
How can you calculate the amount of pay?
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.
For employees whose pay varies
If the employee has been employed (or engaged by an employment business) 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.
What about employer national insurance and pensions contributions?
All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees. But will be able to claim this back from the government also however any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings will not be covered.
Can the employee wages be topped up?
Yes, this will be a cost that the business has to meet. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will also be a cost the business has to meet.
Do the minimum wage rules apply?
Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working therefore this will not apply.
How long does an employee need to be furloughed for?
The government has stated the minimum is three weeks. To ensure employers comply with that, they will only be able to submit one claim every three weeks.
How is income tax and employee national insurance affected?
This will be calculated as normal and employers will be liable to pay this to HMRC.
What is the tax treatment of the grant?
The grant will be included as income when calculating the businesses taxable profits for the year.
This is all the information we have at the moment regarding the Job Retention Scheme. You can access the Government Business Support hub for information on the Business Interruption loan and other support packages.
If you need to get in touch with us the best way is to email us at email@example.com and we will call you back. Please send a message outlining your enquiry and your current contact telephone number and we will get back to you as soon as possible.