BREAKING NEWS: COVID-19 CHAOS CONTINUES AS GOVERNMENT RELEASES LATE-NIGHT UPDATE ON CORONAVIRUS JOB

Last night (26th
 March 2020), the Government released clarification on the Coronavirus Job
 Retention Scheme (CJRS) announced last Friday.
 The CJRS is a temporary scheme open to all UK employers for at least
 three months starting from 1 March 2020. The scheme is now expected to be up
 and running by 30th April 2020 which is a slight delay to the
 original guided date of 01st April 2020.

Employers will be able to use a
 portal to claim for 80% of furloughed employees’ (employees on a leave of
 absence) 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. Employers can use this scheme
 anytime during this period.

The scheme is open to all UK
 employers that had created and started a PAYE payroll scheme on 28 February
 2020.

We have collated the following
 questions that will be on all employers minds over the coming weeks to help you
 navigate furloughing employees.

Who can claim?

Any UK organisation with
 employees can apply. You must have
 created and started a PAYE payroll scheme on or before 28 February 2020 and
 have a UK bank account.

Are
 all employees covered by the scheme?

Furloughed employees must have
 been on your PAYE payroll on 28 February 2020, and can be on any type of
 contract, including full-time employees, part-time employees, employees on
 agency contracts and employees on flexible or zero-hour contracts.

To be eligible for the subsidy,
 when on furlough, an employee can not undertake work for or on behalf of the
 organisation. This includes providing services or generating revenue. While on
 furlough, the employee’s wage will be subject to usual income tax and other
 deductions.

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 and pay
 their salary subject to the terms of the employment contract you agreed.

It is important for employers to
 be mindful that the minimum period of furloughing is three weeks. If you are going to need your employee to
 work within that three week period, alternatives to furloughing should be
 considered.

Employers should discuss with
 their staff and make any changes to the employment contract by agreement. When
 employers are making decisions in relation to the process, including deciding
 who to offer furlough to, equality and discrimination laws will apply in the
 usual way, so please contact NucleusHR for assistance on how to avoid such
 practices.

To be eligible for the subsidy
 employers should write to their employee confirming that they have been
 furloughed and keep a record of this communication.

Employees hired after 28
 February 2020 cannot be furloughed or claimed for in accordance with this
 scheme.

You do not need to place all
 your employees on furlough. However, those employees who you do place on
 furlough cannot undertake work for you.

What
 happens if an employee is on unpaid leave?

Employees on unpaid leave cannot
 be furloughed, unless they were placed on unpaid leave after 28 February.

What
 if an employee is absent on the grounds of illness?

Employees on sick leave or
 self-isolating should get Statutory Sick Pay, but can be furloughed after
 this. Employees who are shielding in
 line with public health guidance can be placed on furlough.

What
 if an employee has more than one job?

If your employee has more than
 one employer they can be furloughed for each job. Each job is separate, and the
 cap applies to each employer individually.

What
 happens if an employee does volunteer work or training?

A furloughed employee can take
 part in volunteer work or training, as long as it does not provide services to
 or generate revenue for, or on behalf of your organisation.

However, if workers are required
 to for example, complete online training courses whilst they are furloughed,
 then they must be paid at least the NLW/NMW for the time spent training, even
 if this is more than the 80% of their wage that will be subsidised.

What
 happens if I have an employee who is on maternity Leave, contractual adoption pay,
 paternity pay or shared parental pay?

If your employee is eligible for
 Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply,
 and they are entitled to claim up to 39 weeks of statutory pay or allowance.

Employees who qualify for SMP,
 will still be eligible for 90% of their average weekly earnings in the first 6
 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings
 or the statutory flat rate (whichever is lower). The statutory flat rate is
 currently £148.68 a week, rising to £151.20 a week from April 2020.

If you offer enhanced (earnings
 related) contractual pay to women on Maternity Leave, this is included as wage
 costs that you can claim through the scheme.

The
 same principles apply where your employee qualifies for contractual adoption,
 paternity or shared parental pay.

What
 can I as an Employer actually claim?

Employers
 need to make a claim for wage costs through this scheme. You will receive a grant from HMRC to cover
 the lower of 80% of an employee’s regular wage or £2,500 per month, plus 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.

At
 a minimum, employers must pay their employee the lower of 80% of their regular
 wage or £2,500 per month. An employer can also choose to top up an employee’s
 salary beyond this but is not obliged to under this scheme.

More
 guidance on how employers should calculate their claims for Employer National
 Insurance Contributions and minimum automatic enrolment employer pension
 contributions, is expected before the scheme becomes live.

How
 do we calculate the amount that we claim?

For
 full time and part time salaried employees, the employee’s actual salary before
 tax, as of 28 February should be used to calculate the 80%. Fees, commission
 and bonuses should not be included.

What
 happens with Employees whose pay varies?

If
 the employee has been employed (or engaged by an employment business) for a
 full twelve months prior to the claim, you can claim for the higher of either:

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.

If
 the employee only started in February 2020, use a pro-rata for their earnings
 so far to claim.

Once
 you’ve worked out how much of an employee’s salary you can claim for, you must
 then work out the amount of Employer National Insurance Contributions and
 minimum automatic enrolment employer pension contributions you are entitled to
 claim.

What
 about Employer National Insurance and Pension Contributions?

All
 employers remain liable for associated Employer National Insurance
 contributions and minimum automatic enrolment employer pension contributions on
 behalf of their furloughed employees.

You
 can however claim a grant from HMRC to cover wages for a furloughed employee,
 equal to the lower of 80% of an employee’s regular salary or £2,500 per month,
 plus the associated Employer National Insurance contributions and minimum
 automatic enrolment employer pension contributions on paying those wages.

You
 can choose to provide top-up salary in addition to the grant. Employer National
 Insurance Contributions and automatic enrolment contribution on any additional
 top-up salary will not be funded through this scheme. Nor will any voluntary
 automatic enrolment contributions above the minimum mandatory employer
 contribution of 3% of income above the lower limit of qualifying earnings
 (which is £512 per month until 5th April and will be £520 per month from 6th
 April 2020 onwards).

What
 happens if the deduction takes us below the National Living Wage/National
 Minimum Wage?

Individuals
 are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW)
 for the hours they are working.

Therefore,
 furloughed workers, who are not working, must be paid the lower of 80% of their
 salary, or £2,500 even if, based on their usual working hours, this would be
 below NLW/NMW.

However,
 if workers are required to for example, complete online training courses whilst
 they are furloughed, then they must be paid at least the NLW/NMW for the time
 spent training, even if this is more than the 80% of their wage that will be
 subsidised.

What
 do I need to make a claim?

Employers
 should discuss with their staff and make any changes to the employment contract
 by agreement (if necessary). For those with a specific lay-off clause within
 the Contract of Employment, permitting you to lay-off without pay, should be
 relatively simple, however, if you do not have such a clause should seek
 separate advice.

We
 encourage you to speak with NucleusHR for advice on the actual process. If
 sufficient numbers of staff are involved, it may be necessary to engage
 collective consultation processes to procure agreement to changes to terms of
 employment.

To
 claim, employers will need:

Employers
 will need to calculate the amount that they are claiming. HMRC will retain the
 right to retrospectively audit all aspects of your claim.

How
 often can I make a claim?

You
 can only submit one claim at least every 3 weeks, which is the minimum length
 an employee can be furloughed for. Claims can be backdated until the 1 March if
 applicable.

What
 happens after I have made a claim?

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.

You
 should make your claim in accordance with actual payroll amounts at the point
 at which you run your payroll or in advance of an imminent payroll.

You
 must pay the employee all the grant you receive for their gross pay, no fees
 can be charged from the money that is granted. You can choose to top up the
 employee’s salary, but you do not have to.

What
 happens if and when the Government ends the scheme?

When
 the government ends the scheme, you must make a decision, depending on your
 circumstances, as to whether employees can return to their duties. If not, it
 may be necessary to consider termination of employment (redundancy).

What
 happens to Employees that have been furloughed?

Employees
 that have been furloughed have the same rights as they did previously. That
 includes Statutory Sick Pay entitlement, maternity rights, other parental
 rights, rights against unfair dismissal and to redundancy payments.

Once
 the scheme has been closed by the government, HMRC will continue to process
 remaining claims before terminating the scheme.

What
 do I do about Tax and National Insurance?

Wages
 of furloughed employees will be subject to Income Tax and National Insurance as
 usual. Employees will also pay automatic enrolment contributions on qualifying
 earnings, unless they have chosen to opt-out or to cease saving into a
 workplace pension scheme.

Employers
 will be liable to pay Employer National Insurance contributions on wages paid,
 as well as automatic enrolment contributions on qualifying earnings unless an
 employee has opted out or has ceased saving into a workplace pension scheme.

Tax
 Treatment of the Coronavirus Job Retention Grant

Payments
 received by a business under the scheme are made to offset these deductible
 revenue costs. They must therefore be included as income in the business’s
 calculation of its taxable profits for Income Tax and Corporation Tax purposes,
 in accordance with normal principles.

Businesses
 can deduct employment costs as normal when calculating taxable profits for
 Income Tax and Corporation Tax purposes.

If you wish to take further advice on how best to handle COVID-19 in your business, please contact NucleusHR on 07960 418494 or toni@nucleushr.com