Coronavirus Job Retention Scheme
In the guidance announced on the 26 March, HMRC set out the eligibility criteria for employers to access the 80% support scheme for employees and directors. The aim of the scheme is to protect jobs and avoid redundancies arising as a result of the crisis and is available until the end of October 2020.
The Government will pay up to 80% of workers’ pay, up to a maximum of £2,500 per month for employees who were employed on the 19 March. It will also include Employers NIC, and Workplace Pension Contributions. The scheme will cover all workers paid through PAYE, salaried, hourly paid, zero hours and will including directors of limited companies.
The position for variable hours and zero rate staff is based on either the higher of either; A) the same months earnings from the previous year, or B) average monthly earnings for the year. Employees who do not have a full 12 months must be based on a pro-rata claim.
The scheme will cover the cost of wages backdated to 1st March 2020 for employees who have already been laid off (they can be re-employed) and for at least three months going forward.
The employee must be informed in writing of the intended furlough and this is the date the subsidy will be deemed to apply. In addition, no limit has been placed on the amount of money available. The Chancellor confirmed that the scheme would apply across the whole of the UK, including Scotland.
For more detailed information on the eligibility criteria for employers and employees, and how to calculate the amount recoverable visit the detailed guide on the ICAEW website.
Although directors are not specifically referred in the guidance published on the 26 March, we have received confirmation that directors are able to claim for 80% of their PAYE salary and eligible to claim under the CVJRS subsidy. The claim does not extend to dividend income.
It is being accepted that as long as directors meet the legal status of being “furloughed” (a temporary suspension of employment for a specified period of time, during which an employee does not receive wages), and are only carrying out essential admin duties such as payroll, making grant claims, or meeting filing obligations such as VAT, accounts and Confirmation Statements, then this will not be considered to be working.
What they must not do is anything that could be considered income generating. It is possible that once this is over HMRC may decide to carry out checks, for example look at the dates on invoices to see if there was any suggestion of chargeable work carried out in the furlough period, so this important point should be considered by directors before making a claim under the scheme for their wages.
Employers will need to designate affected employees as furloughed workers and notify their employees of this change of employment status.
They must note that this remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation between the employer and employee, and may require consultation with all staff.
We would recommend all employers and directors take HR advice if they are unsure as to how “Furlough” status will apply to their particular circumstances. We have a letter template we can supply to you, and our in-house HR specialist Sue Buck is available to assist at an agreed hourly rate.
Employers will then need to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal which is going to be available in April. The minimum claim period is 3 weeks, and it is expected that the payment of grants will be made within weeks and hopefully by the end of April. Our payroll team will be available to assist employers with the reclaim process once the portal is live.
For details of costs and additional support available from our payroll team regarding calculations required and making the grant claim during this period please contact our payroll manager Vicky@farnellclarke.co.uk.
Here are some furlough scenarios.
Statutory Sick Pay Recovery
In addition, to help insulate businesses against the impact of COVID-19, small and medium-sized businesses (with less than 250 employees) will have the costs of SSP for any employee off work because of COVID-19 for up to 14 days refunded by the Government in full. This is currently at a rate of £94.25 per week (£95.85 from 6 April 2020) for up to 28 weeks and will apply from day 1 of isolation rather than day 4.
Self-isolating employees will be able to obtain a notification via NHS111, which they can use as evidence for absence from work ― this is intended to take pressure away from GPs. https://111.nhs.uk/isolation-note
Employers with fewer than 250 employees will be eligible ― the size of an employer will be determined by the number of people they employed as of 28 February 2020
Existing payroll systems are not designed to facilitate employer refunds for SSP, the Government will work with employers over the coming months to set up the repayment mechanism for employers via a website portal.
The new rules apply to all absence periods effective from 13 March 2020 for coronavirus related self-isolation. It does not apply to other sickness related illnesses.
In the budget it was announced that from April 2020 the HMRC approved scale rate for employers reimbursing employees working from home (with homeworking arrangements in place) will increase from £4 to £6 per week which is worth noting with the increased number of employees now working from home.
Universal Credit and Employment Support Allowance
If you don’t qualify for SSP, for example because you’re self-employed or earning less than £118 per week, you can now more easily claim Universal Credit or Contributory
Employment and Support Allowance. For example, minimum income floor requirements will be temporarily relaxed, self-isolators will not need to visit a jobcentre and contributory Employment and Support Allowance will be payable, at a rate of £73.10 a week if you are over 25, for eligible people affected by COVID-19 or self-isolating in line with advice from Day 1 of sickness, rather than Day 8.
Advice for employers
ACAS recommends employers take the following steps
- Keep everyone updated on actions being taken to reduce risks
- Make sure everyone's contact numbers and emergency contact details are up to date
- Consider extra precautions for staff who might be more vulnerable or has a long-term health condition
- Make sure managers know how to spot symptoms of coronavirus and are clear on any relevant processes (e.g. sick pay, self-isolation etc)
- Make sure there are clean places to wash hands with hot water and soap, and encourage everyone to wash their hands regularly
- Provide hand sanitiser and tissues for staff, and encourage them to use them
- Consider if any travel or meetings are necessary and if meetings can be held remotely instead
- Keep up to date with the latest government coronavirus advice on GOV.UK
- Keep up to date with advice from ACAS
Reforms to off-payroll working rules will now come into effect on 6 April 2021 instead of 6 April 2020 as part of a response to COVID-19.
Dealing with employees, time off and closures
The current government advice is around “social-distancing”. Therefore, employers will want to consider flexible working (to avoid busy commuting times), allowing employees to work from home and cancelling face-to-face meetings and rearranging with technology where possible.
If an employee does not want to go to work, employers should try to listen and address any concerns they have. It may be possible for the employee to arrange to use holiday or unpaid leave. Refusal to attend work without valid reasons could result in disciplinary action.
If the workplace needs to close or reduce staff hours, they should talk to employees as soon as possible and throughout. Unless it says in the contract or is agreed otherwise, they still need to pay their employees for this time. Employers have the right to tell employees to take holiday for this period, but they must give twice the amount of holiday as notice (for example, if you want to close for 5 days, you must give everyone 10 days’ notice).
Employees are entitled to time off to look after dependents. There is no statutory right to pay for this time off. The time taken must be reasonable for the situation.
Due to school closures, employees can use dependant leave or holiday (if the employer agrees). If any arrangements are made, it is a good idea to put them in writing.
For more details advice on how to manage employee matters please read the ACAS guidance.