COVID-19 / CoronaVirus Update June 2020.
There are big changes for you all and based on these changes you may need to start making some decisions on whether you are able to pay the top up and if not, do you need to make redundancies – if you do, redundancies can be made alongside furlough so you only have to pay the topped up amount of the salary. If you need further information on this get in touch. So as I am sure you have heard there are changing coming from 1st July to the Job Retention Scheme and I have to say that the scheme is more generous than was expected! The scheme is going to be more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working. And from the1st August employers will have to start contributing to the wage costs of paying their furloughed staff and this gradually increases in September and October. Part time furloughing From 1st July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time. Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for. Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing. When claiming the Job Retention Scheme grant for furloughed hours, they will need to report and claim for a minimum period of a week (this week can be made up of worked hours and furloughed hours). They can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. I am sure ACAS will issue a template for the letters to employees so I will let you have a copy when they issue one. If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough. For any staff you bring back to work part time you need to complete a weekly timesheet.
Changes to Employer Contributions
From August, the government grant provided through the job retention scheme will be slowly tapered. - In June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours, NI and Pension Contributions they work in July. - In August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed. - In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay all ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500. - In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay all ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500. - The cap on the furlough grant will be proportional to the hours not worked. Remember this year there is a £4000 Employment Allowance toward the Employers NI so this will be used up before you have to start paying Employers NI, it started in April so some of it has already been used up. One other very important issue is that the scheme will close to new entrants from 30th June, employers will only be able to furlough employees that they have furloughed for a full 3 week prior to 30th June – the detailed legislation for these changes are not going to be issued until 12th June but the accountancy boards take on this is that if you currently have staff that you have un-furloughed they need to be back on furlough by 10th June to be able to be furloughed in the future so please look at what staff you currently have off furlough and whether you may need to put them back on furlough again between now and October (if we find out that this is viewed differently by HMRC I will let you know). I know this isn’t as straight forward as it sounds because who knows what is going to happen between now and then but this date is going to be important. And finally please, please make sure that you are still paying the Tax and NI across to HMRC – the money you are receiving is to cover these costs so HMRC are expecting that money to be paid across to them – HMRC will carry out investigations and have the power to recover payments, by imposing a 100% tax charge, from anyone who has not paid the Tax and NI to HMRC. If you were behind with any PAYE/NI payments prior to the Job Retention Claims you can arrange a payment plan for these but you must pay across the amounts due that relate to the Job Retention Claims – to make sure the payments get allocated to the correct months make sure you use the correct reference number, otherwise they will allocate the payment to the oldest debt first – there aren’t any fines for the PAYE prior to the Job Retention Scheme, just added interest, so how your payment gets allocated is important – they have a 6 year investigation window on these claims so, as you can imagine, they will start looking into claims with great detail! So hopefully you haven’t nodded off reading all that and it makes sense, of course this information is as of today’s date and if it changes I will update you and anything relating to Covid-19 can be found on the gov.uk website.