COVID-19 September Update: Job Retention Scheme

In light of the widespread disruption caused by COVID-19, Her Majesty's Government has put in place a series of measures to support individuals and businesses over the coming months.

Coronavirus Job Retention Scheme

The Job Retention Scheme has been established as a part of these measures, with the aim of helping businesses retain their staff.

Changes to the scheme, first launched in April, were introduced on 1 September 2020.  From this date HMRC will reimburse 70% of the salary of 'furloughed' employees for the hours they do not work - up to a cap of £2,187.50 per month. Employers will have to contribute 10% of their employees usual wages for these unworked hours - whist also continuing to pay their National Insurance and pension contributions.

'Furloughed' employees are workers who are still on the payroll but not working. At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee's salary beyond this but is not obliged to under this scheme. The scheme closed to new entrants on 30 June, which means that employers are only able to furlough employees that were furloughed for a full three week period prior to this date. The deadline for claims was 31 July 2020. Details include:

• All UK employers with a PAYE scheme created and started on or before 19 March 2020, a UK bank account and enrolled for PAYE online are eligible
• Employers must have submitted a report under the Real Time Information (RTI) reporting system for the employees to be furloughed on or before 19 March 2020
• Payments to furloughed employees will be treated as liable for income tax and national insurance contributions
• Employees must be placed on furlough for a minimum of 3 consecutive weeks. They can be furloughed multiple times, but when they return to work, they must be taken off furlough.

From 1 July employers using the scheme were able to bring furloughed employees back to work part time whilst still obtaining support from the scheme. They could bring back furloughed employees for any amount of time/shift pattern, whilst still being able to claim the Job Retention Scheme grant for their normal hours not worked. Employers need to report and claim for a minimum period of a week when claiming for furloughed hours and can claim for further furlough periods as needed.

The grant the Government provides through the scheme is gradually being tapered to reflect employees return to work. From 1 October the government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% of their regular salary - to a cap of £2,500.

Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

The Government has also introduced the Jobs Retention Bonus to encourage employers to bring back and retain furloughed staff. It will provide a bonus of £1,000 per employee for every furloughed worker brought back to work and continuously employed through to January 2021. In order for employers to receive this bonus, the employees must be paid at least £520 per month from November 2020 to January 2021. More details are to follow on the HMRC website.

How to make a claim

Employers must designate and notify furloughed employees of their change in status and then submit information to HMRC about those employees and their earnings through a new online portal. make the claim employers will need to provide the following:

• their ePAYE reference number
• the number of employees being furloughed
• the claim period (start and end date)
• amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
• their bank account number and sort code
• their contact name
• their phone number

Following a claim

When an employer has submitted a claim, HRMC will check it, and if eligible pay it by BACS to a UK bank account. The employee must be paid all the grant received for their gross pay.

Employees you can claim for

Furloughed employees must have been on your PAYE payroll on or before 19 March 2020 and were notified to HMRC on an RTI submission on or before 19 March 2020. To clarify, employers must have made an RTI submission notifying payment of that employee to HMRC on or before 19 March 2020 for them to be eligible.  

Furloughed employees can be on any type of contract, including:

• full-time employees
• part-time employees
• employees on agency contracts
• employees on flexible or zero-hour contracts
• employees on fixed term contracts - contracts can be renewed or extended during the furlough period
• shielding employees if they are unable to work from home and you would otherwise have to make them redundant
• employees who have caring responsibilities as a result of COVID-19 i.e. employees who need to look after children
• employees with more than one employer can be furloughed for each job

When on furlough, an employee cannot undertake work for the organisation, including providing services or generating revenue. The employee's wage will be subject to normal income tax and other deductions whilst on furlough. Critical business tasks can be allocated to employees that have not been furloughed.

The scheme does not apply to employees who are working, but on reduced hours, or for reduced pay.

The scheme also covers employees who were made redundant, or stopped working for their employer on or since 28 February 2020, if they are rehired by their employer. The employee must also have been notified to HMRC via an RTI submission on or before 28 February 2020.

Eligible individuals who are not employees

Alongside employees, the scheme is eligible for the following groups so long as they are paid via PAYE:

• office holders (including company directors)
• salaried members of Limited Liability Partnerships (LLPs)
• agency workers (including those employed by umbrella companies)

Apprentices

Apprentices can also be furloughed and can continue to train whilst in furloughed. They must be paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage whilst training. Employers must cover any shortfall between the amount claimed for their wages through the Job Retention Scheme and the relevant minimum wage.

Apprenticeship Levy and Student Loans

Grants from the Job Retention Scheme do not cover the Apprenticeship Levy and Student Loans, so these should continue to be paid.

Self-isolating employees or employees on sick leave

Employees will be entitled to Statutory Sick Pay (SSP) if they are on sick leave, or self-isolating. Whilst employees are receiving SSP, they cannot be furloughed. Employers can furlough them once they are no longer receiving SSP.

For more information about how you can claim click here.

The government's new measures also include the deferral of VAT and Income Tax payments and a Statutory Sick Pay relief package for small and medium sized businesses.

For more information, please visit the HMRC website here.

This article is for general information purposes. It is not addressed to any specific parties and does not constitute advice (legal or otherwise) to any person.