We are always delighted to partner with experts in other professions and bring their expertise to our clients. One such is Andrew Price & Co accountants and we thank Andrew Price for providing a very useful guide, which brings together information we have already provided to you plus new information relating to claiming the Job Retention Scheme rebate from HMRC, once the portal is up and running. Breaking news this afternoon is that HMRC have confirmed that the portal will be up and running on 20th April which is great news (well done to all those programmers who have been burning the midnight oil!) So, as all good Scouts know, it’s good to “Be Prepared” and it is timely to advise you on what you’ll need to do to make your claim.
Andrew Price & Co recently published the following to which, as you would expect, we have added our comments. We are delighted to share this with you and hope you find it useful and informative.
HOW TO CLAIM FOR YOUR EMPLOYEES’ WAGES THROUGH THE CORONAVIRUS JOB RETENTION SCHEME (CJRS)
The Government recently provided more details on how the CJRS works, the information here is based on the government advice issued on 4 April 2020. Please note, the online service you will use to claim is not open yet but see our breaking news above, it will be open on 20th April. Andrew Price & Co has the capability to calculate and submit your CJRS Claim so please let them know if they can help; contact details below.
Overview of the scheme
The principle behind the CJRS is that if you cannot maintain your current workforce because your operations have been severely affected by coronavirus (C19), you can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs (up to a maximum of £2,500 per employee per month) plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that (reduced) wage.
This is a temporary scheme in place for 3 months starting from 1 March 2020, but it may be extended if necessary and employers can use this scheme at any time during this period. It is designed to help employers whose operations have been severely affected by C19 to retain their employees and protect the UK economy. All employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.
Who can claim?
You must have created and started a PAYE payroll scheme on or before 28 February 2020, enrolled for PAYE online and have a UK bank account.
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
Employees you can claim for
You can only claim for furloughed employees who were on your PAYE payroll on or before 28 February 2020. Employees hired after 28 February 2020 cannot be furloughed and claimed for in accordance with this scheme.
Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero hour contracts; foreign nationals are also eligible to be furloughed.
To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf of, the organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff who are not furloughed. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
Agreeing to furlough employees
Employers should discuss with their employees 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 grant employers must confirm in writing to their employee(s) confirming that they have been furloughed (enlightenHR retained clients can use the enlightenHR Furlough Leave Agreements in the shared Dropbox). A record of this communication must be kept for five years. You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.
How much you can claim
You will need to claim for:
- 80% of your employees’ wages (even for employee’s on National Minimum Wage) – up to a maximum of £2,500 per month. You can only claim for periods after the employee stopped work; do not claim for the worker’s previous salary when they are working prior to the Furlough Leave period
- minimum automatic enrolment employer pension contributions on the reduced wage
- employers’ National Insurance contributions on the reduced wage
You can choose to top up your employee’s salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.
Rebates will be prorated if your employee is only furloughed for part of a pay period e.g. if the Furlough were the 6th to 29th April (3 weeks), you would only be able to claim the rebate for the 3-week Furlough Leave period and pay full pay for 1st – 5th and 27th – 30th April.
Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they were written to confirming their furloughed status.
The way you work out your employees’ wages is different depending on what type of contract they’re on and when they started work.
Full or part time employees on a salary
Claim for the 80% of the employee’s salary (up to a maximum of £2,500 per month) as of 28 February 2020, before tax.
Employees whose pay varies
If the employee has been employed for 12 months or more, you can claim the highest of either the:
- same month’s earning from the previous year
- average monthly earnings for the 2019-2020 tax year
If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work.
If the employee only started in February 2020, work out a pro-rata for their earnings so far and claim for 80%.
Employer National Insurance and Pension Contributions
You’ll still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees; you can claim for these too.
You cannot claim for:
- additional National Insurance or pension contributions you make because you chose to top up your employee’s salary
- any pension contributions you make that are above the mandatory employer contribution or which relate to any top up amount
Past Overtime, Fees, Commission, Bonuses and non-cash payments
You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime (overtime worked in the month preceding the furlough leave), fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.
Benefits in Kind and Salary Sacrifice Schemes
The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary. Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.
Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.
Apprenticeship Levy and Student Loans
Both the Apprenticeship Levy and Student Loans should continue to be paid as usual. Grants from the Job Retention Scheme do not cover these.
National Minimum Wage
Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW)/ Apprentices Minimum Wage (AMW) for the hours they are working or treated as working under minimum wage rules.
This means that furloughed workers who are not working can be paid the lower of 80% of their salary or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage. However, time spent training is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage, taking into account the increase in minimum wage rates from 1 April 2020. As such, employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours. Where the furlough payment is less than the appropriate minimum wage entitlement for the training hours, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for 100% of the training time.
Where a furloughed worker is paid close to minimum wage levels and asked to complete training courses for a substantial majority of their usual working time employers are recommended to seek advice (enlightenHR will be delighted to advise
What you will need to make a claim
Employers should discuss with their employees and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process so speak to enlightenHR if you need some guidance. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment enlightenHR comments: in “normal” circumstances, if sufficient numbers (20+) of employees are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment (Trade Union and Labour Relations Act (TULRA)). However, there is provision in the legislation which says that “If in any case there are special circumstances which render it not reasonably practicable for the employer to comply with a requirement of the subsection [requiring collective consultation] the employer shall take all such steps towards compliance with that requirement as are reasonably practicable in those circumstances”. enlightenHR understands that the COVID-19 situation would be defined as “special circumstances” and that employers can consult with employees in a non-collective way, as long as they do consult with them.
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 consecutive weeks)
- your bank account number and sort code
- your contact name
- your phone number
It is the employer’s responsibility to make the claim. Please contact Andrew Price & Co on 01803 296678 or office@andrewprice.co.uk if you need help in calculating the claim. HMRC will retain the right to retrospectively audit all aspects of your claim.
The full guidance can be found at: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme#history
Echoing previous messages, but important to do so, Andrew Price & Co are working with clients to evaluate where they envision a significant business cost, disruption or, in the worst case, business failure and are assisting in the development of action plans and strategies to mitigate the risks based on the information available. enlightenHR will provide support in relation to the people impacts of such situations. Please get in touch if you require similar assistance and advice.
| enlightenHR Ltd. The Garden Office Suite 27 Marcombe Road Torquay TQ2 6LL M 07967221595 T 01803 469466 E alison@enlightenhr.com Wwww.enlightenhr.com |
Andrew Price & Co Haldon House 4 Castle Road Torquay TQ1 3BG |
T 01803 296678
F 01803 213400
E office@andrewprice.co.uk
W www.andrewprice.co.uk
