Coronavirus Job Retention Scheme online portal now open
Updated 17 June 2020
The information and any opinions contained in this summary are for general information purposes only, are not intended to constitute legal or other professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances.
The changes will see a phased reduction in Government support for businesses with you as an employer having to make more financial input from the beginning of August. The Coronavirus Job Retention Scheme is effectively closed from 1 July to those not previously furloughed on or before 10 June 2020. At present, furloughed employees are not allowed to do any work for you and currently, there is no requirement to provide your employees with work if you are not in a position to do so.
What is the Coronavirus Job Retention Scheme and who is eligible?
Type of business: All UK employers with a PAYE scheme, and which meet the eligibility rules; also applies to the public sector, Local Authorities and charities.
What it is: HMRC will reimburse up to 80% of employees’ wages up to £2,500. The scheme was initially backdated to 1 March to last for 3 months. Government support for businesses is to be gradually reduced and is effectively closed from 1 July with 10 June being the deadline for employees to be classified as furloughed and eligible for the Coronavirus Job Retention Scheme.
What to do:Employers should have designated employees as furloughed workers and notified them of the change. A furloughed worker is an employee who has been asked to stop working but is retained on the payroll.
Bringing furloughed workers back to work
Non-essential retail can now re-open and this means you will be bringing employees back to work, but when they do, they must be taken off furlough.
From 1 July, you can flexibly furlough employees – this means they can bring employees back to work for any amount of time, and any shift pattern. You will still be able to claim the Coronavirus Job Retention Scheme grant for the usual hours, which are not being worked although you will be responsible for paying the wages of your employees for the time worked.
If you do flexibly furlough an employee, then you will need to agree this with the employee and confirm the new furlough arrangement with you in writing. There needs to be a written record, but a written response from the employee is not required. A record of this communication should be kept for five years. When making decisions in relation to the process, including who to offer furlough to, equality and discrimination laws still apply.
Before you start your claim, you will need to:
To claim, for the Coronavirus Job Retention Scheme, you must have:
- Created and started a PAYE payroll scheme on or before 19 March 2020
- Enrolled for PAYE online
- A UK bank account
If you use an agent who is authorised to act for you for PAYE purposes, they will be able to make a claim on your behalf and you will need to tell them which bank account you would like the grant to be paid into.
Claims should be started from the date that the employee finishes work and starts furlough. You may choose to top up your employees’ wages, but you do not have to.
You cannot claim for:
- additional National Insurance or pension contributions you make because you choose to top up your employee’s wages
- any pension contributions you make that are above the mandatory employer contribution
The Government has provided an online calculator that can help you work out 80% of your employees’ wages, National Insurance Contributions, and pension contributions.
Employees you can claim for:
- You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.
- An employee can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts.
To be eligible for the grant, when on furlough an employee cannot undertake work for, or on behalf, of the organisation or any linked or associated organisation. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
10th June was the last date for placing employees on the Coronavirus Job Retention Scheme
The scheme will be closed to new entrants from 30 June and you will only be able to furlough employees who have been furloughed for a full 3-week period prior to 30 June. An agreement with your employee to be furloughed needed to have been reached by 10 June. You will have until 31 July to make any claims in respect of the period to 30 June.
When: The Job Retention Scheme has now been launched and you can now claim. Click here for more information. You will need the Government Gateway user ID and password you received when you registered for PAYE online.
HMRC have provided a step by step guide which explains the information that employers need to provide to make a claim through the Coronavirus Job Retention Scheme. HMRC also has a webinar online on how to make a claim, click here to watch.
HMRC will check claims made through the scheme and payments may be withheld or need to be repaid in full to HMRC if the claim is based on dishonest or inaccurate information or found to be fraudulent.
As employees gradually return to work, the scheme will be tapered as follows:
June and July: 80% of wages will be paid by the government, capped at £2,500 as well as National Insurance (ER NICs) and pension contributions. You are not required to contribute.
August: The government will continue to pay 80% of wages, capped at £2,500, and you will be responsible for paying ER NICs and pension contributions. For the average claim, this represents 5% of the gross employment costs you would have incurred had the employee not been furloughed.
September: The government will pay 70% of wages, capped at £2,187.50. You will pay ER NICs and pension contributions and 10% of wages to make up 80% total, capped at £2,500. For the average claim, this represents 14% of the gross employment costs you would have incurred had the employee not been furloughed.
October: The government will continue to pay 60% of wages, capped at £1,875 with you as an employer paying ER NICs and pension contributions and 20% of wages to make up 80% total, capped at £2,500. For the average claim, this represents 23% of the gross employment costs you would have incurred had the employee not been furloughed.
The Coronavirus Job Retention Scheme will close on 31 October 2020.
For more information about the Job Retention Scheme, click here.
What can The Retail Mutual do for your business?
We fully appreciate that these are uncertain times for many businesses. As you can appreciate, we have received many enquiries about the Coronavirus, and we are doing our best to respond to everyone in a timely matter. To help answer some of the recurring questions, we have created a Coronavirus resource hub which contains FAQs, lots of useful government links and information as well as other useful content that can assist you through this time.