On 20 March 2020, the Chancellor Rishi Sunak first announced the Coronavirus Job Retention Scheme. This is being set up to help businesses cover wages for employees on temporary leave ('furlough') due to coronavirus (COVID-19).
The government is trying to ensure that companies that are no longer able to operate during this time can maintain their workforce until they are ready to start trading again.
The whole process of deciding which employees to furlough and how the scheme will work is very complicated. This article is meant as a quick overview, and we suggest that for more information you speak to your accountant or view the full guidance by clicking here - Claim for your employees' wages through the Coronavirus Job Retention Scheme.
Who can claim?
Businesses that have employees can claim the Job Retention Scheme if they meet the following criteria:
- They created and started a PAYE payroll scheme on or before 28 February 2020
- They have already enrolled for PAYE online
- They have a UK bank account
This scheme is open to all organisations that operate a UK payroll, including businesses, charities, recruitment agencies and public authorities.
How much can you claim?
The Job Retention Scheme claims can be backdated to 1 March 2020 and provides three months of support. This support may be extended depending on the length of time the UK is operating lockdown measures.
You can claim for the following:
- 80% of your employees’ wages up to a maximum of £2,500 per month. This includes any apprentices and staff that are on minimum wage.
- Employer National Insurance contributions for the subsidised furlough pay.
- Employer pension contributions for the subsidised furlough pay, read the full guidance to find out how this works in practice.
Businesses can top up their employee's salaries if they can afford to do this. It is important to note that employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.
Also, any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks.
What is the process for claiming this support?
The guidance states that the portal for making claims for the Job Retention Scheme will open on 20 April 2020. If you have a payroll provider, then they should be able to deal with the whole process and make a claim on your behalf.
If you plan to process the claim yourself, then you must make sure that you have already enrolled for PAYE online.
It is also essential that you understand how the claim will be affected if any of your employees are on sick leave, either now or over the three month period as they may need to be moved to Statutory Sick Pay.
We have created the flowchart below to help illustrate the process for the Coronavirus Job Retention Scheme. If you require any further advice, please do contact us.
You can call 01623 490 120 or email