The Coronavirus Job Retention Scheme - What does the guidance tell us?
This Coronavirus Job Retention Scheme (CJRS) has been established by the UK Government with the aim to support businesses to retain their staff whilst imposed measured by the Government negatively impact the activities of businesses across the country.
UK employer with a PAYE payroll scheme created and started on 28th February 2020
UK employer has a UK bank account
UK employer includes all businesses, charities, recruitment agencies, and public authorities (An Administrator can access the scheme where a business is under the management of an administrator).
An employee on your PAYE payroll on 28th February 2020, and
is a full-time or part-time employee, an employee on agency contract, an employee on a flexible or zero-hour contract
The employee has been placed on "furlough"
To claim, you will need:
your ePAYE reference number
the number of employees being furloughed
the claim period (start-end date)
your bank details
you contact name
your phone number
The scheme provided employers with a lifeline to subsidise their monthly wage costs to avoid the need to make employees redundant. This means that employers can (subject to the terms of employment) place employees on "furlough" for a retrospective durations between 1st March 2020 to 31st May 2020.
The provision for applying the scheme retrospectively is to enable employers to include any employees placed on leave or who have previously been made redundant prior to the announcement of the scheme (from the 28th February 2020 onwards). This means you can bring redundant employees back on-board (subject to their agreement) and claim the wage subsidy support.
The scheme provided a grant (you do not need to repay) equivalent to 80% of your usual monthly wage costs with a cap of £2,500 per employee per month, plus national insurance contributions and pension contributions.
You should write to your employees whom you intend to place on a temporary leave of absence and benefit from this scheme. This communication may be required as evidence to claim the subsidy from HMRC.
You will only be able to claim once in any 3-week periods and a furlough period must be a minimum length of 3-weeks per employee.
To furlough employees, you must place your employees on a temporary leave of absence from work. This means that they cannot conduct any activities that deliver services or generate revenue for the business.
You also need to consider your employment contract terms (express or implied) in relation to your employee's hours, work location, pay, and status. If you are looking to furlough employees, you are changing these aspects of their employment contracts which will require their consent, or where written terms of employment dictate their written consent by deed.
If you have employees with variable monthly pay, you will need to calculate their average earnings. You should claim the higher or either:
the same month's earning from the previous year, or
the average monthly earnings from the 2019-2020 tax year.
If the employee has not worked for a 12-month period, you can claim an average of their monthly earnings for the period since they started work. You will need to apply the national insurance contributions to this calculation and any pension contributions.
If the employee started in February 2020, use a pro-rata for their earnings so far to claim.
More information is available from the Government website: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme