The Government has announced a range of measures aimed at helping businesses through the Coronavirus outbreak. Some of these measures are provided without the need to do anything, but very few are aimed at small and micro businesses that work from home.
One, though, is available to any business in the UK that employs people.
The Job Retention Scheme pays UK businesses up to £2,500 to cover 80% of the cost of workers that they would have had to make redundant, or ‘lay-off’, because they have had to shut down or reduce staffing in an attempt to contain the virus.
More details are emerging all the time, and the system is not actually in place yet, but what we know so far is that staff that were employed on 28 February 2020 can be placed on the scheme so that they can be paid at least 80% of their salaries (subject to tax, National Insurance and pensions deductions in the normal way) whilst they stay at home not working.
The idea is to look after jobs and make sure that we are ready to continue from where we left off when the virus hit. In the chancellor’s words, “hard-working employers and employees should not have to suffer hardship unnecessarily. Our Coronavirus Job Retention Scheme supports workers and businesses up and down the UK.”
The scheme is effective from 1 March, and you can even re-employ people you made redundant since the 28 February and put them on the scheme. The scheme is initially going to run for three months but will be extended if the situation has not improved by then.
From the employer’s and employee’s point of view, the payroll process remains virtually the same, with wages being paid as normal, after all the usual deductions, but without variable items such as commissions and bonuses. Employers do have to follow their contractual process for putting employees on the scheme (termed furlough), which will usually involve a meeting to explain it to the employees, followed by a letter confirming the decision. Where there is no written contract, or no provision for lay-off, this will have to be done by agreement with the employee, and again confirmed in writing.
Whilst the employee is on furlough, they cannot work for the business, but they can undertake training (which has to be paid at no less than the National minimum wage). In addition, it has just been announced that employees can also volunteer for the NHS without risking their pay.
The reimbursement to the employer will include the Employers National Insurance and pension contributions, said to be worth up to £300, meaning there is little or no cost to the employer for furloughing their employees throughout the crisis. The claim for reimbursement is then made online and a repayment will be made to the employer. At this stage, the claim and repayment process is not in place, but the government have announced that the claims portal will be available by the end of the month. Once the reimbursement process is in place, it will be paid to the employer and will be treated as taxable income of the business when it is received.
Here at Stones Accountancy, we are continuing to maintain payroll processing for all our clients as usual and will be dealing with the furlough notifications as required.
We will be keeping the position under review, as announcements and more details are emerging all the time. Feel free to contact us should you require any assistance or further information on this.
