COVID-19: Support Staff Wages - Coronavirus Job Retention Scheme

For those who can afford to stay open, most have been faced with the sudden shift into managing a remote workforce, reduced working hours and wage cuts.

The worst case scenario is of course ceasing trading and letting staff go permanently, therefore the British government and other governing bodies have introduced a number of subsidies and aids to business to manage this crisis, support staff where possible and mitigate the long term effects. Below we talk through these supports and the ways in which businesses can access them. 

Disclaimer: Occupop is not a governing body or financial institution, this information has been collated from gov.uk, HMRC and various financial experts as at date of publication and is subject to change. Any information provided here is intended to inform rather than advise.

How to support staff wages - Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme is a temporary scheme open to all U.K. employers for at least three months, that commenced on the 1st March 2020. This payment is to safeguard employees from redundancy and support employers who have been adversely affected by COVID-19.

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This scheme will provide the following support/refund to employers:

• HMRC will pay employers a grant worth 80% of a furloughed employees* usual wage costs, up to £2,500 a month
• It will also pay the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.
• Fees, commission and bonuses should not be included
• An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.

*Furloughed employees: 'Furloughed' is the Government’s term for those employees who are available but cannot work as a result of the national coronavirus measures in place, including social distancing. To qualify for the Coronavirus Job Retention Scheme, your staff should not undertake work for your business while they are furloughed. Furloughed employees include:

• full-time employees
• part-time employees
• employees on agency contracts
• employees on flexible or zero-hour contracts

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How businesses qualify for the Coronavirus job retention scheme: 

The scheme is available to employers from all sectors except the public sector whose business activities are being adversely impacted by the COVID-19 pandemic. Businesses must do the following to ensure employees are eligible:

• Employers must have created and started a PAYE payroll scheme including all furloughed employees on or before 28th February 2020
• Designate affected employees as ‘furloughed’ workers and notify employees of this change 

Points to note on the Coronavirus job retention scheme: 

• Reduced hours/pay employees: If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll
• Statutory sick pay: Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this. 
• Employees on unpaid leave: Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.

Coronavirus Job Retention Scheme payment dates:

Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account. HMRC are currently processing all forms and payments with the view to have all payments completed by the end of April. 

The entire amount of the grant must be paid to your employees, running a payroll as normal. No fees can be charged from the money that is granted. You can pay additional income to your employees but that is at your discretion. 

How to apply for the Coronavirus Job Retention scheme: 

You will need to submit information to HMRC about the employees that have been furloughed and their earnings. An online service is currently being constructed to help employers manage these claims. 

Employers need to make a claim for wage costs through this scheme. For full and part time workers, calculate 80% of the employee’s actual salary before tax, as of 28th February. 

For employees whose pay varies you can claim for the higher of either, the same month’s earnings from the previous year or average monthly earnings from the 2019-20 tax year. If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

Claim amounts for the Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions should be calculated and submitted separately. 

You can only submit one claim every 3 weeks i.e. the minimum length an employee can be furloughed for. Claims can be backdated to the 1st March 2020 if applicable.

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