Updated guidance on claiming for wage costs through the Coronavirus Job Retention Scheme
Posted on: 27th Mar 2020 by: Demos HR Solutions
The latest guidance provides clarity on some key points of the Job Retention Scheme which I have summarised for you below:
- The scheme is open to all UK employers that had created and started a payroll scheme on 28 February 2020 and have a UK bank account.
- You can claim for any type of employee, as long as they were on your payroll on 28 February 2020. This includes full time, and part time employees, employees on agency contracts and those on flexible or 0-hour contracts.
- The scheme also covers employees who have been made redundant since 28 February if they are re-hired.
- Employees cannot undertake work for or on behalf of the organisation to be eligible for the grant.
- The minimum length an employee can be furloughed for is 3 weeks.
- The employees wage will be subject to usual income tax and other deductions which the employer remains liable for including minimum automatic enrolment employer pension contributions.
- Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working. Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.
- 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.
- If an employees’ pay varies and they have been employed for a full 12 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 an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
- Any changes to the employment contract should eb discussed with affected employees and agreed. Decisions made in relation to which employees to furlough will be bound by usual equality and discrimination laws.
- Employees hired after 28 February cannot be furloughed.
- If an employee was placed on unpaid leave before 28 Feb they cannot be furloughed (but those who were placed on unpaid leave after 28 February can be).
- 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.
- Employees who qualify for Statutory maternity pay will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower).
- If you offer enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the scheme.
The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.
- An employer can also choose to top up an employee’s salary to 100% but is not obliged to under this scheme.
- To make ac claim you’ll need
- your 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.
- You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
- You can only submit one claim at least every 3 weeks.
- Claims can be backdated until 1st March if applicable.
- Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
In other news, The Coronavirus Act 2020 was enacted on Wednesday night and introduces a new statutory emergency volunteering leave, to support health and social care authorities. The Act’s provisions on volunteering leave are expected to be implemented imminently but early details are available here.
Finally Business Secretary Alok Sharma has today (27 March) announced that workers who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry over up to 4 weeks of unused leave into the next 2 leave years, easing the requirements on business to ensure that workers take statutory amount of annual leave in any one year. More details on this are available here.
I will continue to keep you updated on the HR implications of any further announcements from the Government, however if you have any specific concerns, please reply to this email or call me on 07974 695 365. Wishing you, your staff and your family safety and good health.
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