The Giftware Associations auditors, CROWE LLP have given us a clear breakdown of the employee retention scheme and what is means for your business.
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020 and will be extended if necessary.
Employers can use a portal to claima grant (not a loan) for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions. The employer has the option to top up the wage cost, but this additional amount (along with the additional Employer National Insurance contributions and minimum automatic enrolment employer pension contributions) will be ineligible for the claim.
We hope that the portal will be open by the end of next week, though employers can start furloughing employees now if they haven’t already done so.
We have summarised the main points from HMRC’s guidance below
- Claims can be made for full time, part time and flexible/zero hour contracts.
- Claim amount will be the lower of £2,500 or 80% of the employees gross wage, PLUS the associated employers NIC and pension contributions (up to the mandatory limit of 3%).
- Gross wage will be the employee’s salary as at 28 February 2020, unless their pay is variable, where it will be the higher of either: the same month’s earnings from the previous year or the average monthly earnings from the 2019-20 tax year.
- Gross wage excludes; bonuses, fees and commissions.
- Employer has the option to pay the additional 20%, but is not required to do so.
- The minimum time an employee can be furloughed for is three weeks.
- The employee must have been on the payroll at 28 February 2020.
- The employee cannot undertake any work for, or on behalf of the company.
- Employers should discuss furloughing an employee with each employee or as a consultation with larger groups, and make necessary changes to the employment contracts in line with employment law.
- To be eligible for the subsidy, employers must write to their employee confirming that they have been furloughed.
- The rules for the grant will not displace the existing employment contract. So for example, we would expect the entitlement to holiday and sick pay would depend on the contract.
To make a claim the employer will need the following details:
- PAYE Reference Number
- Number of employees being furloughed
- Claim period (start date and end date)
- Amount claimed (per minimum length of three weeks)
- Bank account number and sort code
- Contact name
- Contact number.
- Please note the employer will pay the employee through payroll, and report payments to HMRC using the Real Time Information (RTI) system as usual.
- Click here to see HMRC’s full guidance on the Coronavirus Job Retention Scheme.