Job Retention Scheme

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Updated 16 April 2020

Employers can furlough their employees and claim back 80% of the cost

What is ‘furlough’?

A furloughed worker is one that is temporarily laid off so that they do no work but are retained as employees to be brought back to work when you have work for them to do.

Eligibility

  • Employees must be furloughed for a minimum of 3 weeks. Employees can then either be immediately furloughed again or return to work.  They can then be furloughed again later if required.
  • Employers can claim 80% of the wage costs. This is capped at £2500 per month plus employer’s National Insurance Contributions and employer’s pension contributions (max. 3% on qualifying earnings)
  • Employers must actually pay a minimum of 80% of pay (or £2500 if lower)
  • Employees on unpaid leave cannot be furloughed unless put on unpaid leave after 28 February 2020
  • The scheme is only available for employees who are not working at all. Employees on reduced hours do not qualify
  • The employer must write to employees to furlough them and keep evidence
  • Employees must have been on the payroll on or before 19 March 2020 and been paid on or before that date with an RTI submission having been made to HMRC to be eligible.
  • Employees on sick leave or self-isolating should get SSP from day 1. They can be furloughed after this period.
  • Employees who are shielding in line with public health guidance can be placed on furlough.
  • Employees with more than one job can be furloughed for each job. The cap applies to each employer separately
  • National Minimum Wages rules only apply if the employee is working. So, if furloughed, the 80% can be below NMW
  • Employees can do volunteer work or training whilst furloughed as long as the business does not generate any revenue from this. If furloughed employees do online training courses they must receive NMW for those hours
  • Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. 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.
  • How much you’ll get

    • Salaried employees – full or part time. The salary (not bonuses, commission etc.) for the pay period ending before 19 March 2020 will be used to calculate the claim.  So, for a calendar monthly paid employee, it will be the salary they were paid in February 2020.
    • Employees with variable pay
      • If the employee has been employed 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 until the date they are furloughed
    • If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

How to claim

Claims will be made through PAYE online in your Government Gateway account and can be made shortly before the payroll is processed and the RTI is submitted for a payroll period (i.e. weekly, monthly etc.).  If Redshield processes your payroll, we will make the claim on your behalf.  HMRC expect this facility to open on 20 April 2020, with claims being paid within 6 working days.

Employers should ensure that their claim meets all the criteria for eligibility as HMRC retain the right to retrospectively audit all aspects of the claim.

Further information can be found at https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

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Juliet Morris Director of Redshield Chartered Accountants
Jenny Dinnage Redshield Chartered Accountants Director
Rachel - an employee of Redshield Chartered Accoutants
Emma is an employee of Redshield Chartered Accountants
Amanda is an employee of Redshield Chartered Accountants

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