Where individuals have been employed for a full year, their monthly earnings will be calculated based on the higher of either:
• The same month’s earning from the previous year • Average monthly earnings from the 2019-20 tax year
For those in employment for less than a year, employers will claim the average of the monthly earnings they’ve received since they started work. This will also apply where monthly pay is variable, for example, for those on zero- hours contracts. For anybody who started work in February 2020, their employer will pro-rata their earnings from that month. Fees, commissions and bonuses should not be included. Once the employee’s salary claim figure has been established, employers must calculate the amount of ER National Insurance (NI) contributions and minimum automatic enrolment employer pension contributions they can claim, as they will be reimbursed in addition to the 80% of the employee’s salary, or £2,500 per month.If employers decide to top up employee salaries, they cannot claim for the associated ER’s NI and automatic enrolment pension contributions through the scheme
The scheme is open to all UK employers who had created and started a PAYE payroll scheme on 28 February 2020, and they must have a UK bank account. Any UK organisation with employees can apply, including:
Businesses
• •
Charities
• Recruitment agencies (agency workers paid through PAYE) • Public authorities
If a company has been taken under the management of an administrator, that administrator will have access to the Job Retention Scheme.
In order to make a claim, employers will need:
Their PAYE reference number
• • •
The number of employees being furloughed
The claim period start and end date
• The amount claimed (per the minimum length of furloughing of three weeks) • Their bank account number and sort code • Their contact name • Their phone number
Claims can be backdated to 1 March 2020, where applicable. HMRC will pay the amounts via BACS to the designated employer bank account.
When the scheme ends, employers must decide whether employees can return to their duties, and if they can’t, redundancies may be considered.
Employees who have been furloughed retain the same employment rights, such as entitlement to SSP, maternity rights, other parental rights, redundancy payments and protection against unfair dismissal.
Payments received by businesses under the scheme must 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 usual when calculating taxable profits for those same purposes.
CIPP comment
The CIPP welcomes the guidance in relation to the Coronavirus Job Retention Scheme, and thinks that the separation of the employee and employer guides will help both businesses and workers to understand how it will work.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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