Information as of Friday 27th March 2020 at 3pm UK
The UK Government today issued further guidance on the operation of the Job Retention Scheme, which is intended to provide grants to employers negatively affected by the COVID-19 pandemic, as a measure to avoid redundancies. The Scheme is available to all UK employers who had employees registered as at 28th February 2020 under a Pay As You Earn (PAYE) scheme and who have taken the decision to ‘furlough’ (put on unpaid leave of absence of at least three weeks) some or all of their employees. The Scheme is effective from 1st March and backdated claims can be made to the date at which employees were furloughed (not before) and is set to last three months, with a possible extension.
As per our previous update, employers cannot unilaterally furlough an employee unless this is specifically stated in their employment contract. As such, employee consultation and written agreement will be required. To qualify for the Scheme, employees cannot work during the period they are furloughed. The Scheme can apply to full time, part time, agency and zero hours employees.
Employers can use a special HM Revenue & Customs (HMRC) portal – which is not yet set up – to claim for 80% of furloughed employees’ usual monthly pay (up to £2,500 a month) plus the associated Employer National Insurance Contributions and minimum Automatic-enrolment employer pension contributions on that wage. Employers can choose to top up employees’ pay if they wish to do so, but any costs related to a top-up will be met by the employer.
Employers will need to pay employees through payroll and report payments as normal to HMRC and claim reimbursement in the form of a cash grant.
To claim, employers will need:
The responsibility for calculating the amount of the claim sits with employers and HMRC have said they will retrospectively audit all aspects of claims made. Claims will be made by BACS payment. Grants claimed under the Scheme must be included as income in the company’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.
If you have employees in the UK and would like to discuss the latest Government announcement, please contact Kiki Stannard or Tim Baker.