After yesterday’s release of the Self-Employed Income Support Scheme, today has seen more information released surrounding the Job Retention Scheme, making it more clear exactly who qualifies, how it will be calculated and how this will work for Employers.
Further information on the Job Retention Scheme
In addition to the previous information we have posted on this scheme, further details were released yesterday:
The scheme is open to all UK employers that had created and started a PAYE scheme on or before 28th February 2020, including Companies in administration and is the responsibility of the administrator. Employees must have been on the payroll at 28th February 2020, and covers full and part time staff, agency staff and those on zero hours or flexible working.
The scheme covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
Employees hired after 28th February 2020 do not qualify. Those on unpaid leave cannot be furloughed, unless this happened after 28th February.
Employees on sick leave or self-isolating should get SSP but can be furloughed after this.
Employees with more than one job can be furloughed for each job. Each job is treated differently, so they can be furloughed from one and continue to work in the other. The cap applies to each employer individually.
Employees must not be working. This includes employees on reduced hours or working for reduced. If they are still working, it will be the employer’s responsibility to pay them in line with the terms of their employment contract.
Employers should write to employees confirming that they have been furloughed and keep this on record.
How it works
Employers will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus 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.
Full time and part time employees’ salaries as of 28th February should be used to calculate the 80%.
If an employee has pay which varies and has been employed for a full 12-month period prior to the claim, you can claim for the higher of the same month’s earnings from last year and the average monthly earnings from the 2019-20 tax year. If they have been employed for less than 12 months, the claim will be for the average of their monthly earnings since they started work. If the employee only started in February 2020, a pro-rata for their earnings to date can be used as the basis of calculation.
Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.
National Living Wage/National Minimum Wage does not apply. This only applies for actual hours worked – employees on furlough will not be actually working any hours.
Employees must be furloughed for at least 3 weeks.
Employer National Insurance and Pension Contributions
All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
You can claim a grant from HMRC to cover wages for a furloughed employee, equal to the lower of 80% of an employee’s regular salary or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
You can choose to provide top-up salary in addition to the grant. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards).
- You should make your claim at the point at which you run your payroll or in advance of an imminent payroll – (We help with this)
- If there is not the work for employees once the scheme ends, they can be made redundant at the end of the furlough scheme
- Grants must be included as income on the Company tax return and is subject to corporation tax at the usual rate – (We help with this)
If your employee is on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay
Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth.
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.
Employees who qualify for SMP, 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). The statutory flat rate is currently £148.68 a week, rising to £151.20 a week from April 2020.
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.
We await official confirmation, but information sources are stating that Directors will be eligible for this scheme and can be furloughed. This will, of course, only apply to their salaried amount, and not their dividend top up, as is the structure for many of our clients, and is the case for the majority of Directors in small OMBs throughout the UK.
They will not be able to formerly undergo work, but can continue to maintain their business (assuming covering off admin tasks and financial tasks, not operational/trading). Once this is officially confirmed we will announce this both via email and on the Facebook group.
I thank you all for you message of support for this email and the Facebook group. We exist to help support you and are more than happy to continue to send this as long as you are happy to receive it.