Advice for Employers
As reported in our earlier news articles, the government has announced a number of support measures aimed at helping employees. The guidance on these measures has been slowly emerging since the schemes were originally announced, and this help sheet aims to summarise the information currently available. In particular breaking news announced today (17 April) is that the Coronavirus Job Retention Scheme has been extended by a month to 30 June 2020.
Coronavirus Job Retention Scheme
This generous scheme was announced to help employers retain their employees through the difficult trading conditions the “lockdown” environment has placed many businesses in. The government have now issued further guidance detailing how the claims will be made which we have summarised below, together with a summary of the other key points that have now been explained in further detail.
The scheme enables employers to furlough some or all of their employees, meaning that the employees have been asked to take a temporarily leave of absence, whilst remaining an employee of the business. The scheme will be in place from 1 March 2020 for at least 3 months, with a potential extension if considered necessary.
How much can Employers claim?
For “furloughed workers”, the employer will be able to claim reimbursement from the government of 80% of employees’ usual monthly earnings (up to a cap of £2,500 per month), plus the associated employment costs including employer National Insurance and the minimum auto-enrolment pension costs on the subsidised wages. The employer can choose whether to cover the remaining 20% of salary payments that are not reimbursed, but should be mindful of the terms of the employment contract and whether these can be varied, as employee written consent may be required if the employment contract does not allow this to be varied.
If employees pay varies, and they have been employed for a period of 12 months prior to the claim, employers can claim the higher of:
· The same month’s earnings from the previous year
· Average monthly earnings from the 2019/20 tax year
If they have been employed for less than 12 months, then the claim is based on an average of their monthly earnings since their employment started.
The calculation should be based on regular payments they are obliged to pay including overtime and compulsory commission.
Who can claim?
All UK employers will be entitled to support through this scheme, however the furloughed employees must have been on your PAYE scheme on or before 19 March 2020 and this must have been notified to HMRC on a payroll submission (this date was previously 28 February 2020 but the government have extended this date after receiving criticism that this negatively impacted those that had recently changed jobs) . All types of employment contracts are covered, including flexible or zero-hour contracts. Employees must be furloughed for a minimum of 3 weeks, and must not undertake any work for the employer during this time. Claims can be backdated to the 1 March 2020, as long as employees were furloughed (i.e. not carrying out any duties) on this date.
Employers must agree with their employees in writing that they will be furloughed and the employees should provide their consent to the arrangement. Employers should consider what may need to be included in this communication in their specific circumstances, and seek advice if in any doubt. A copy of this communication must be kept for 5 years as HMRC can audit the claims made.
Company Directors
Company Directors can be furloughed, however they cannot carry out any work beyond their statutory duties as a Director. They therefore cannot complete any commercial or revenue-generating work or provide services to the company.
How do you claim?
Employers will be required to process their payroll as usual (although taking into consideration whether the additional 20% payment will be paid to employees or not) and then reclaim the reimbursement from the government via a separate online portal. A claim can be submitted every 3 weeks to coincide with the minimum furloughing period. HMRC have indicated that this portal will be available from 20 April 2020, with payments expected within 6 workings days. Employers can start preparing to make their claim by collating the following information:
· PAYE reference number
· Number of employees being furloughed
· Names of the furloughed employees
· National Insurance numbers for the furloughed employees
· The claim start and end date
· Amount claimed
· The employer’s Unique Tax Reference (UTR)
· Bank account number and sort code you wish the reimbursement to be paid to
· Contact name and phone number
Help with Claims
If you have an agent that is authorised to act for you for PAYE matters, they will be able to make a claim on your behalf. If however you use a payroll bureau service, they may only have authority to make payroll submissions on your behalf and this will not cover the Job Retention Scheme claims. Employers in this situation should register for a government gateway account (if they don’t already have one for their business) so that they will have access to submit their own claim.
Please do get in touch with the Charter Tax team if you have any questions or need assistance with submitting a claim.
Support for businesses paying sick pay
Statutory Sick Pay (SSP) is usually paid by the Employer with no reimbursement from the government for amounts paid. In order to help smaller businesses, the government have set up the Coronavirus Statutory Sick Pay Scheme whereby small and medium sized businesses with less than 250 employees will be entitled to reclaim 14 days of Statutory Sick Pay (SSP) for sickness absence due to COVID-19. The repayments are available for sickness starting on or after 13 March 2020.
SSP is also now due from day 1 for people with COVID-19, or who are self-isolating as they have possible symptoms, or who are caring for someone with symptoms, rather than from day 4 as would usually be the case with SSP. Employees will also not need to give employers a doctor’s fit note for the employer to make a claim under the scheme.
The repayment system is currently being set up and will be available to Employers in the near future. The scheme has not been given an end date and so will be available for as long as the government deem it necessary.
Relaxation of Annual Leave regulations
The government has amended regulations to allow the statutory annual leave requirement to be carried over into the next 2 years.
Usually, employers are under an obligation to ensure their employees take their full statutory entitlement in one year, however the relaxation of the Working Time Regulations will enable up to 4 weeks of unused annual leave to be carried into the next 2 years where it is not “reasonable practical” for the employee to take this leave as a result of the effects of Covid-19. This is aimed at key industries such as healthcare or food production and retail, but could also cover situations where employees have been unable to take their leave entitlement due to sickness or caring for others with coronavirus.
