Job Retention Scheme: Up to date guidance

by | Nov 26, 2020 | Blog

As a result of the COVID-19 pandemic, the government has created a number of support schemes to help business and self-employed people battle through this year of unprecedented challenges. The Job Retention Scheme was launched to support employers, helping them pay their employees’ wages in a bid to protect the nations jobs and reduce the risk of widespread unemployment.

Although the Job Retention Scheme was set to end at the end of October with a slightly less supportive scheme set to take its place, the chancellor, Rishi Sunak,  announced its extension until the 31st March 2021 due to the second national lockdown.

If you cannot afford the costs of your workforce salaries or your business operations have been negatively impacted by the pandemic, you can record your employees as being on furlough and apply for a grant to cover 80% of your employee’s usual salary for hours not worked (up to a maximum of £2,500 per month).

You will be eligible to claim for any employee who was employed on the 30th October 2020 as long as you have made a PAYE RTI submission to HMRC between the 20th March and the 30th October of this year. All employers with a UK Bank account and UK PAYE schemes will be eligible for the furlough grant and you do not need to have claimed previously in order to claim from the 1st November.

You can furlough your employees for any amount of time or work pattern until the 1st March 2021, meaning employees can still work reduced hours if needed and as an employer, the only contributions you will need to make towards the furloughed employee’s wages are NIC’s, pension costs and an optional 20% top-up if you choose to pay your employees 100% of their wage.

Which employees can you furlough?

You are eligible to claim for all employees on any type of employment contract including full and part time, agency, flexible or zero-hours.

You can also furlough employees who are on a fixed term contract however we recommend you read the full eligibility criteria that can be found on the website for further details.

Apprentices can also be furloughed and can continue to undergo training. This also applies to other employees who can engage in training as long as this does not contribute services to, or generate revenue on behalf of, the business.

If you have made redundancies, you can still claim furlough for staff who are serving their statutory notice period however these grants should not be substituted for redundancy payments.

If you have staff whose health has been affected by Covid-19 and they are therefore unable to work due to illness or due to caring responsibilities resulting from coronavirus they are also eligible for the Job Retention Scheme grant.

If your employee is self-isolating or on sick leave, they should receive SSP as the furlough scheme is not intended for short term absences due to sickness however if employees are clinically extremely vulnerable and at high risk, they can be furloughed due to inability to work.

If your employee has just returned from parental leave or is still on parental leave then they can still be furloughed however slightly different rules apply depending on the dates you wish to make a claim. You can refer to the Government website for details.

job Retention Schme checklist:

To make a claim, you will need:

  • To be registered for PAYE online
  • Your UK, Channel Island or Isle of Man bank account number and sort code
  • The billing address on your bank account (this is the address on your bank       statements)
  • Your employer PAYE scheme reference number
  • The number of employees being furloughed
  • Each employee’s National Insurance number
  • Each employee’s payroll or employee number (optional)
  • The start date and end date of the claim
  • The full amounts that you’re claiming for including employee wages, employer National Insurance contributions (for claims up to 31 July 2020), employer minimum pension contributions (for claims up to 31 July 2020)

You also need to provide either:

  • Your name (or the employer’s name if you’re an agent)
  • Your Corporation Tax unique taxpayer reference
  • Your Self-Assessment unique taxpayer reference
  • Your company registration number

If you’re claiming for employees that are flexibly furloughed, you’ll also need:

  • The number of usual hours your employee would usually work in the claim period
  • The number of hours your employee has or will work in the claim period
  • You will also need to keep a record of the number of furloughed hours your employee has been furloughed in the claim period

It is important that you provide this data to process your claim. Payment of your grant may be at risk or delayed if you submit a claim that is incomplete or incorrect.

When making your claim:

  • you do not have to wait until the end date of the claim period for a previous claim before making your next claim
  • you can make your claim more than 14 days in advance of the pay date (for example, if you pay your employee in arrears)

While employees are furloughed, they must not work for the organisation or provide any services for the organisation however they can take part in training, volunteer for another organisation or continue working for another employer.

Income tax and National Insurance contributions must also still be paid whilst the employee is receiving furlough wages and even though employees are furloughed they will still have the same rights at work including SSP, Annual leave, maternity and other parental rights, rights against unfair dismissal and redundancy payments.