Firstly, we would like to thank all of your for participating so much in the Q&A section of the webinar - by sharing your questions we were able to provide answers that will have helped lots of other fellow business owners and leaders in your industry.
Secondly, there have been A LOT of updates and changes in guidance in the last week, so please note the following items differ to the answers in the webinar depending on when your live Q&A occurred!!
- Holiday can be paid out during furlough, employer needs to top up to 100% for those dates. You can also still carry over holiday and bank holidays in lieu to use later
- If you pay NMW you do not need to increase the rate to the new 2021 rate whilst employee is on furlough, until they are back physically working for you. If they are salaried use their salary paid in the RTI file before 19th of March, if they are not salaried use the higher of same month previous year or average over the year
- Please scan down and read both newsflashes for recent updates to guidance!
A quick recap on the scheme:
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. HMRC expect this to be up and running by the 20th of April. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).
If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
This is a temporary scheme in place for 4 months starting from 1 March 2020, but it may be extended if necessary and employers can use this scheme anytime during this period. It is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.
You must have:
- created and started a PAYE payroll scheme on or before 28th February 2020
- enrolled for PAYE online - this can take up to 10 days to gain the activation code needed to get set up
- a UK bank account
- For Pay Check clients - we are a file only bureau so we cannot make the claim on your behalf, but we can help you to understand which sections of your payroll reports to take the data from
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
Last week we had confirmation that the scheme will officially open for applications on the 20th of April.
You do need to have an online Employers account with HMRC - you can apply for this here https://www.gov.uk/register-employer
Remember that the activation code for your application will go to the business registered address and has to be operated within two weeks of issue, so apply ASAP.
We have had one client confirm this morning (14/04/20) that HMRC agreed to send the activation code to her email and home address instead so do ask for this if you do not have access to your business registered address at this time!
It should also be noted that all DEA (Deduction of Earnings Attachments), that is debt from Universal Credit overpayments, have been suspended temporarily - you should enact a stop date of 31st of March until further notice. This does not affect any other attachments of earnings such as Child Support or Council Tax deductions.
HMRC have sent an update on an important change to the scheme relating to employee eligibility:
- you can claim for employees that were employed as of 19 March 2020 and were on your PAYE payroll on or before that date; this means that you will have made an RTI submission notifying us of payment of that employee on or before 19 March 2020
- employees that were employed as of 28 February 2020 and on payroll (i.e. notified to us on an RTI submission on or before 28 February) and were made redundant or stopped working for you after that, and prior to 19 March 2020, can also qualify for the scheme if you re-employ them and put them on furlough.
More information on this can be found on GOV.UK.
How to claim
As you prepare to make a claim, please note:
- the online claim service will be launched on GOV.UK on 20 April 2020 – please do not try to access it before this date as it won’t be available
- the only way to make a claim is online – the service should be simple to use and any support you need available on GOV.UK; this will include help with calculating the amount you can claim
- you can make the claim yourself even if you usually use an agent
- claims will be paid within 6 working days; you should not contact us unless it is absolutely necessary – any queries should be directed to your agent, representative or our webchat service
- we cannot answer any queries from employees – they will need to raise these with you, as their employer, directly.
Information you will need before you make a claim
In addition to the information in our previous email, you will need to have the following before 20 April 2020:
- a Government Gateway (GG) ID and password – if you don’t already have a GG account, you can apply for one online, or by going to GOV.UK and searching for 'HMRC services: sign in or register'
- be enrolled for PAYE online – if you aren’t registered yet, you can do so now, or by going to GOV.UK and searching for 'PAYE Online for employers'
- the following information for each furloughed employee you will be claiming for:
- National Insurance number.
- Claim period and claim amount.
- PAYE/employee number (optional).
- if you have fewer than 100 furloughed staff – you will need to input information directly into the system for each employee
- if you have 100 or more furloughed staff – you will need to upload a file with information for each employee; we will accept the following file types: .xls .xlsx .csv .ods.
Can I apply retrospectively for part of March, even if we had processed payroll prior to making the decision to furlough, or can you only furlough from the point of signature of agreement with the employee?
You can only put an employee on furlough and claim for that amount from the date at which you contractually agreed with the employee to do so. So if you paid the March payroll earlier in the month for the whole month, then agreed to furlough from mid-end of March, you can include this portion of the pay in your claim.
You do not need to rerun the payroll to do this, but we recommend from April you identify the furlough pay as a separate adjustment to keep your records in good order in case of a future HMRC audit.
I have part time or seasonal staff, how do I calculate their average pay for furlough payments?
You would take the average hours they have worked over the past 12 months/52 weeks or for however long they have worked for you, for example if they worked 100 hours over 10 weeks you would pay them 10 hours a week as furlough pay x basic rate.
I have someone soon to go on mat leave who would be furloughed. How should I treat SMP v furlough? Can I or should I furlough instead of SMP?
The employee should start their SMP as normal, so you would bring them off furlough to start SMP. Remember you automatically reclaim 92% of the SMP figure off your total PAYENIC payment anyway, or 103% if you are a small employer.
How do we calculate the ER NICS if we aren't claiming the whole wage (because of the £2500 max)?
There are a couple of interpretations on how to proceed with this question - we must stress that guidance is being issued every couple of days so do keep checking official HMRC guidance on this point before you make your claim.
One way to calculate:
You would claim for the ER NIC based on the furlough amount, so for example if the furlough amount was 80%, you can claim 80% of the ERNIC
Other way to calculate:
You would take the furlough amount, minus the Secondary Threshold (£719 for March and £732 from April) and multiply the remainder by 13.8%
If you need to choose an option we would recommend the second option - your claim will be lower but it means you have no possibility of over claiming.
The National Minimum Wage has increased to £8.72 this week. Do I use the new higher rate in my calculations of employees’ wages and reclaim.
You do not need to use the new NLW or NMW rates per normal statutory rules for furlough workers whilst you are reducing the pay to 80%, these rates only apply to hours physically worked, so do not apply to a furloughed worker as they can not do any work for you during this time. You must apply them if you take a worker off furlough.
Would a furloughed employee that is due to enrol in the Auto Enrolment Scheme still go into the pension scheme?
Yes, The Pensions Regulator has stipulated that all of the same obligations as an employer operating an auto enrolment scheme still apply. Of course, if the employee being on 80% of salary takes them below the threshold for eligibility, then they would not enrol until they are eligible.
Whilst my staff member is on furlough I would like them to do some training, is this ok?
Furloughed employees can engage in training, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation or a linked or associated organisation. Furloughed employees should be encouraged to undertake training.
Where training is undertaken by furloughed employees, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages (see National Minimum Wage Section for more details).
I have pivoted my business – for example changed to takeaway/delivery services. I have furloughed staff that cannot do this type of work - for example maybe some don’t have a driving license/chef skills – can I hire more staff if I have some on furlough?
Yes, you can still hire staff whilst you have other staff on furlough, if you have a justifiable reason for not bringing the furloughed employee back - for example they may be shielding from the virus, or they may not have the required skills for the available roll.
Are my staff accruing holiday pay? Can I ask them to take some of their holiday during the period we are closed?
Yes your staff continue to accrue holiday pay whilst on furlough, and you can ask them to take some their holiday during this time, which would mean you would top up the 80% to 100%.
If you have staff you are already topping up to 100% you do not pay them any extra.
If you have staff that work variable hours you would calculate the average hours that you are going to pay them, and this is the same number of hours they would accrue holiday on.
If my employee has a full time job during the week, Monday to Friday and works in the pub at the weekends - can both employers put them on furlough as well? Will the Government pay out twice for one employee but two employers ?
Yes, the same employee can be furloughed from more than one employment and the government will reimburse each individual employer for the furlough wages.
Are furloughed wages paid net or gross?
Furlough wages are calculated gross for the claim to HMRC, but paid net to the employee after the normal tax, NIC and student loan deductions have been made.
As a sole director of my company, am I entitled to furlough myself as it is a restaurant and I have no income?
A director may furlough themselves and continue to do some mandatory tasks associated with their office, such as file accounts or maintain supply billing etc, but they cannot be seen to have generated any revenue whilst they are claiming furlough wages as a CJRS grant.
Does the 3 months of the scheme run from March - May or from when you first furlough an employee?
The 4 months that the scheme is open runs from March -> June, it does not start from when you first furlough an employee. The Chancellor has said the government will review this after the 3 months, but there is no indication at the moment that this will be extended.
Are tronc payments included in the furlough amount, if they are contractual?
HMRC have stated that all compulsory contractual payments must be honoured but tronc payments do not count at this moment in time:
This means that the following payments are included when working out the 80% share:
- Regular wages
- Variable PAYE wages
- Compulsory bonuses
- Compulsory commissions
- Discretionary bonuses
- Discretionary commission
- Tronc shares
- Non-cash payments such as health insurance
- Use of a company vehicle.
Can I furlough staff on sick leave? If not, how does the Covid-19 SSP rules work?
If staff are sick with the Coronavirus or self isolating you can pay them SSP for up to two weeks and reclaim this from the government in future.
The reclaim scheme can only be used by employers if they:
- are claiming for an employee who’s eligible for sick pay due to coronavirus
- had a PAYE payroll scheme that was created and started on or before 28 February 2020
- had fewer than 250 employees on 28 February 2020
You can only pay SSP if an employee has been off for 4 days of more in relation to the virus, at which point you can pay SSP for the whole of the sickness, you do not have to take off the 3 waiting days as you do with other sickness.
You should ask your staff member to provide you with a sick or isolation note which they can obtain from NHS online.
If a staff member is shielding (i.e. they are vulnerable to the virus and have to stay home but do not have the means to continue working from home) you can furlough them.
SSP is paid at £95.85 per week. As of updated guidance on 09/04/20, if an employee is sick they can be furloughed in order to be paid the higher amount. All the same furlough rules will then apply.
We operate salary sacrifice for pension contributions - when we calculate the 80% claim do I continue to apply the salary sacrifice or do I have to exclude it?
You need to calculate furlough pay based on the salary after the sacrifice, and as an employer you need to continue to pay the normal sacrificed amount over to the pension provider, as you have entered into a contractual agreement to exchange part of the employees salary for this benefit of pension contributions free of tax and NI.
Can you only claim for time already furloughed or for planned furlough period, when the portal opens?
You can claim for furlough pay already processed and furlough pay you are about to process within the next ten days. So for example when the portal opens on the 20th of April you can claim for March, and if you know your figures, for April too. HMRC will expect you to put in another claim later for May and June.
What can I do to reduce some costs to help my cashflow?
Register for Time to Pay, so you can delay your PAYENIC payments for up to 3 months - please note HMRC could charge interest for a delayed payment so make sure that you really need to delay the payment or try and ask HMRC for an interest level before making the agreement https://www.gov.uk/difficulties-paying-hmrc
Keep yourself up to date with every new initiative in case there is a change to the guidance that will benefit your business, and consider outsourcing - if you only have half a job available for a staff member that could be furloughed, see if there is an outsource that can do it for you to allow you to furlough the employee.
Lots of business services have changed their contractual terms due to this crisis, with many offering just 3 or 6 month terms and plenty offering free advice.
If you have a friend or business associate that is struggling with their payroll requirements, Pay Check are offering short term contracts - please ask them to get in touch.