Following the huge economic impact of COVID-19, the government issued a new Job Retention scheme to minimise redundancies.
However, as the scheme is so new a lot of uncertainty remains.
To support we’ve sieved through the government’s published guidance to collate everything you need to know.
Who is covered by the scheme?
The scheme covers any UK organisation with employees, such as:
- Public authorities
- Recruitment agencies (agency workers paid through PAYE)
If an administrator has taken a company under their management, the administrator can access the Job Retention scheme.
Additionally, the government also recently announced updated criteria in a bid to combat fraud, stating:
- You must have created and started a PAYE payroll scheme on or before 28 February
- A UK bank account is required
Which employees can claim?
Providing employees meet the previously mentioned criteria of being on your PAYE payroll on 28 February, most contract types can receive support, including:
- Full-time employees
- Part-time employees
- Zero-hour contract employees
- Agency contract employees
How much should be paid?
The minimum that employers must pay their staff is 80% of their regular wage up to £2,500 per month, with the option to top up their salary.
Full-time and part-time employees should have their support calculated on their salary before tax, as of 28 February, also fees, commission and bonuses aren’t included.
Employees with varied hours and pay should have their support calculated on either the same month’s earnings from the previous year or the average monthly earnings from the 2019-2020 tax year.
If the varied employee has been employed for less than a year, the support is calculated on their average monthly earnings since starting.
If the varied employee started in February 2020, use a pro-rata for their earnings so far to claim.
Once this is calculated, you can apply for a grant to cover these payments that will be backdated to 1st March 2020.
What to do regarding contributions
Employers will remain liable for the associated Employer National Insurance and pension contributions on behalf of all furloughed employees.
But the grant will cover this alongside the 80% wage assistance, however, the grant will not cover the contributions on any additional top-up salary or voluntary automatic enrolment contributions above the minimum.
Also, both Apprenticeship Levy and Student Loans should continue to be paid as usual but the grant from the Job Retention Scheme will not cover these.
What is needed to claim?
To claim the following is required:
- ePAYE reference number
- Claim start and end date
- Number of furloughed employees
- Your bank account and sort code
- Amount claimed (per the minimum length of furloughing for 3 weeks)
- Your phone number
- Your contact name
While it’s your responsibility to calculate the amount you’re claiming, HMRC retains the right to audit all aspects of your claim.
It’s also important to state that you can only submit one claim at least every three weeks, which is the minimum length of time an employee can be furloughed.
If you furlough employees, make sure you explain what it means and reassure them that it’s temporary.
Continue to pay your employees their designated amount and claim your grant to cover payments.
Also, if you’d like more information on keeping your business operational check out our handy support hub here.