Coronavirus Job Retention Scheme

Posted by brampton

  • covid-19
  • |
  • 1 December , 2020

The UK government has extended the Coronavirus Job Retention Scheme until March 2021 and has reintroduced the 80% wages cover until at least January 2021.

The Job Support Scheme that had been in place has been temporarily suspended and is set to be reintroduced in 2021 when the Government plans to get people back to work.

The Coronavirus Job Retention Scheme that began in March 2020 was set to end on 31st October 2020. However with the second wave of Coronavirus causing further disruption to working life this has now been extended to at least January 2021. The Government will continue to pay 80% of wages to members of staff who are furloughed with the cap on this remaining at £2,500 per month. This will be reviewed in January.

If you are part of the furlough scheme as either the employee or the employer it is important to ensure that all arrangements are confirmed in writing and agreed by both parties. It is important to remain up to date on all changes to the Job Retention Scheme. The UK Government website is a vital resource in this task. You can find the latest updates here.

We are aware that this is a confusing time and with changes happening almost weekly it is difficult to focus on everything at once. We’ve put together some key points below that will help you quickly understand how these latest changes will be affecting you.

QUESTIONS

  1. Is a furloughed member of staff allowed to work for their employer whilst furloughed?
    1. During the first Job Retention Scheme employees were not permitted to work for their employer. This was up until July 2020 when the government announced new flexible rules that allowed furloughed staff to return on a part time basis. This required the employer to decide on the hours the employee would work and then pay them for those hours based on their salary.

This flexibility will continue into the new November – March period of the scheme and will require the employers to pay the wages for the hours worked as well as all employer National Insurance and employer pension contributions.

  1. Does an employer have to top up a furloughed employees salary?
    1. In short, the answer is no. The minimum requirement for an employer to pay their furloughed employees is 80% of their agreed salary which can then be reclaimed through the furlough scheme. The employer can choose to top up the remaining 20% but there is no legal obligation to do so.

Since July 2020, employees were able to return to work flexibly whilst still on furlough. The employers are then responsible for paying for hours worked and the associated National Insurance and Pension costs for those hours worked.

  1. What restrictions are there on who can and cannot use the Job Retention Scheme?
    1. Before October 30th 2020 employees were only eligible for the scheme if they were on the company payroll before 19th March 2020.

To support employers on returning employees back to work and begin the process of part time furloughing claims were only allowed for employers using the scheme and for employees currently furloughed.

  1. Can the employee have more than one job?
    1. Yes. Employees can have multiple jobs with multiple employers. Each job is to be treated individually and the furlough scheme can apply to these jobs separately.
  1. Will employers be liable for Employer National Insurance and Pension contributions?
    1. Employers remain liable for associated Employer National Insurance contributions and the minimum auto enrolment employer pension contribution for the furloughed employee. These costs are not able to be claimed back via the scheme.
  1. Will employees be subject to PAYE and Employee National Insurance?
    1. Yes, the wages of employees will continue to be subject to Income Tax and National Insurance deductions. They will also continue to pay in pension contributions unless they have opted out of their workplace pension scheme. If in doubt we suggest contacting your employer to find out what your contributions are.
  1. Are company employment benefits affected by the furlough period?
    1. No. The furlough scheme does not override or affect existing contractual obligations such as sick pay and holiday hours.
  1. How is the furlough scheme managed by an employer?
    1. The furlough scheme involves the payment of a grant, not a loan, to the employer. All payments received by the business as part of the grant are to be included as income in the business’ calculation of its taxable profits for Income Tax and Corporation Tax purposes.

Businesses can then deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

  1. How do I make a claim?
    1. The grant is paid directly to the employer via the online system set in place. It is the employers responsibility to apply for the claim which can be done but following this link – here.
  1. Does the same apply to those who are self employed?
    1. No, the furlough scheme does not apply to those who are self employed. The government has other measures in place to support the self employed communities.

If you are self employed you can learn more by reading our Coronavirus Self Employed article.

If you have any other questions please feel free to contact us where one of our team members will be happy to assist you further!

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