Guidance Note

Coronavirus Job Retention Scheme

Please be aware that this note is based on the information published as at 04 April 2020 and is intended to provide guidance on how Foremans LLP believe at this juncture the scheme will be implemented. The below is based on Foremans LLP’s interpretation of the available information. You should not regard this as advice on how the scheme will operate as several factors have still to be announced.

We have compiled some frequently asked questions which may help to explain our understanding of the scheme:

Guidance Note

Coronavirus Job Retention Scheme

Please be aware that this note is based on the information published as at 04 April 2020 and is intended to provide guidance on how Foremans LLP believe at this juncture the scheme will be implemented. The below is based on Foremans LLP’s interpretation of the available information. You should not regard this as advice on how the scheme will operate as several factors have still to be announced.

We have compiled some frequently asked questions which may help to explain our understanding of the scheme:

Employers Guidance:

What is the Coronavirus Job Retention Scheme?

The UK Government has set up the Coronavirus Job Retention Scheme to help employers who cannot maintain their current workforce due to the business operations being severely affected by coronavirus. The idea is to temporarily suspend the employment so that employees can be retained until after the pandemic is over. The employment, therefore, does not have to be terminated now.

Who Can Claim?

Any entity with a UK payroll can apply.

The employer must have:

·         Created and started a PAYE payroll scheme on or before 28 February 2020

·         Enrolled for PAYE online

·         A UK bank account

Who can the Employer claim for?

·         Furloughed employees who were on the PAYE payroll on or before 28 February 2020. The employer cannot claim for employees hired after 28 February 2020.

·         Employees can be on any type of employment contract:

Ø Full time

Ø Part time

Ø Agency

Ø Flexible

Ø Zero hour

·         Foreign nationals are eligible to be furloughed.

What does furlough mean?

A furlough is a temporary period of leave due to the special needs of an employer.

Can an employee work whilst they are designated as furloughed?

No. To be eligible for the grant an employee cannot undertake any work for the organisation. If an employee is working reduced hours or for reduced pay they will not be eligible.

What if the employees have already been made redundant or stopped working for the employer?

If employees were made redundant, or stopped working for the employer, after 28 February 2020 the employer can re-employ them and declare them furloughed. The employer can then claim the grant for these employees.

Can the employer claim if the employee is self isolating or on sick leave?

No. If an employee is self isolating or on sick leave they should claim Statutory Sick Pay. An employer cannot claim for employees whilst they are receiving Statutory Sick Pay. An employee can be furloughed and claimed for once they are not receiving Statutory Sick Pay.

Can the employer claim if the employee is shielding?

Yes. If the employee is unable to work from home and otherwise they would have to be made redundant. Employers can claim for furloughed employees who are shielding in line with public health guidance or need to stay home with someone who is shielding.

What happens if the employee has more than one job?

If an employee has more than one employer then each job is treated as separate. The employee can be furloughed from each job with the cap being applied to each employee.

Employees can be furloughed in one job and receive payment whilst continuing to work for another employer and being paid wages as normal.

What happens to employees on a fixed term contract?

Employees on fixed term contracts can be furloughed. Contracts can be renewed or extended. Where a fixed term contract ends the employer can no longer claim the grant.

Does anyone apart from employees qualify for the Coronavirus Job Retention Scheme?

The grant can be claimed for the following provided they are paid through a PAYE scheme:

·         Office Holders including Company Directors;

·         Salaried members of Limited Liability Partnerships (LLP’s)

·         Agency Workers (including those employed by Umbrella Companies).

What do I need to do if I am a company Director?

The board of Directors can decide whether a director is eligible to be furloughed. The decision should be noted in the company records and communicated in writing to the director(s).

Can a company director work whilst furloughed?

If the company director needs to comply with certain statutory obligations for the company they are permitted to do so. The company director should not do any work that would normally generate commercial revenue or provide services on behalf of the company.

Can an Agency Worker work whilst furloughed?

No. Agency Workers should perform no work through or on behalf of the agency whilst they are furloughed by the agency.

Who pays an Agency Worker who works through an Umbrella company?

Where an agency supplies clients with workers who are employed by an umbrella company that operates PAYE, it will be for the Umbrella company and the worker to agree whether to furlough the worker or not.

How does the employer agree to furlough the worker?

Employers should discuss with their staff and make changes to the employment contract by agreement.

The employer must confirm in writing to their employee that they have been furloughed. A record of this communication must be kept for 5 years.

Does the employer have to furlough the whole workforce?

No. The whole workforce does not need to be furloughed.

What can the employer claim?

The PAYE business can claim a grant of:

1.      up to the lower of:

·         80% of the “regular” salary or

·         £2,500

2.      Minimum automatic enrolment employer pension contributions on the subsidised wage.

Does the employer need to top up the 20% reduction?

The employer can top up the salary but does not have to.

How does the employer calculate the salary if the salary varies?

If the employee has been employed for 12 months or more the employer claims the higher of:

·         Same months earnings the previous year or

·         Average monthly earnings for the 2019/2020 tax year.

If the employee has been employed for less than 12 months the employer claims the 80% of their average monthly earnings since they started work.

Is the 80% salary subject to PAYE and NI?

Yes. The payment to the employee is treated as salary under the normal PAYE and NI rules in force at the time of the payment including employers NI.

Can the employer claim under the Coronavirus Job Retention Scheme for any employers NI?

Yes. Employer NI contributions for the 80% furlough payment can be claimed.

Can the employer claim under the Coronavirus Job Retention Scheme for any pension contributions?

Yes. Pension contributions up to the mandatory employer contribution can be claimed.

What will the employer need to make the claim?

·         Business PAYE reference number

·         Number of employees being furloughed

·         Claim period (start and end date)

·         Amount claimed

·         Business bank account number and sort code

·         Contact name

·         Phone number

Can I claim now?

No. The online service to be used for claims is not yet available. The service is expected to be available by the end of April 2020.

Further useful information can be found at:

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

If you would like to discuss any of the issues noted above, please contact us on:

01244 625 500 or 01978 364 000

contactus@foremansllp.com

Whilst all due care and attention has been taken in the preparation of these notes no liability can be accepted for any omission or item contained therein.

Foremans LLP

07 April 2020