Job Retention Scheme - latest update 16 04 2020

Coronavirus Job Retention Scheme Guide

Rules outlined so far

1. Any employee that is a Furloughed employee must not work for the employer during this period
2. Furlough is from 1^st March 2020, so it can be backdated. Please note that although the scheme can be backdated to the beginning of March to support all those employed at that time, the employer is only eligible to claim the grant once they have agreed with the employees & the employees have stopped working for the employer. This will still be subject to employment law in the normal ways.
3. It was originally only available to employees that worked for the employer and on the payroll on 28^th February 2020
   • This was later updated to include employees as of 19^th March 2020
4. All businesses small or large, charitable or non-profit are eligible.
5. The scheme is a grant not a loan to the employer.
6. The grant will be paid to employers through the new online system which is currently been built for this purpose.
7. The employer will continue to pay the employees through the payroll, using the RTI system as required.
8. The scheme will be administered by the HMRC:
   • The Relevant employees must be designated as Furloughed employees
   • Employers will submit the information to HMRC through the new online portal (This could be done by payroll agents)
   • As the new system will take time to build, if employers are struggling to pay the employees, they should look to the Coronavirus Business Interruption Loan (This is something the employer will need to deal with)

9. The maximum grant will be calculated per employee and is to be the lower of:

• • 80% of wages. What we know so far is ‘wage for all employment costs up to a cap of £2,500 per month’. This includes the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.The wages will be determined by reference to a defined period (this is yet to be confirmed)
  • £2,500 per month

Examples:

(based on our current understanding of the calculations, which have not yet been clarified, 2020/21)

Business 1 employs Mr A at a monthly salary of £2,000. Mr A is a member of the workplace pension scheme.

Employer Costs are:

• Salary: £2,000
• N/I cont: £174
• Pension: £44.40 (3% of qualifying earnings)

Total cost to employer: £2,218.40

The grant available for the employer is the lower of

1. 80% of £2,000 (£1,600) plus
2. N/I cont: £119.78 (based on £1,600) plus
3. Pension: £32.40 (3% of qualifying earnings)
   • TOTAL – £1,752.18 and
4. £2,500

So, the grant would be £1,752.18

Business 1 employs Mr B at a monthly salary of £2,000. Mr B has previously opted out of the workplace pension scheme.

Employer Costs are:

• Salary: £2,000
• N/I cont: £174

Total cost to employer: £2,174

The grant available for the employer is the lower of

1. 80% of £2,000 (£1,600) plus
2. N/I cont: £119.78 (based on £1,600)
   1. TOTAL – £1,719.78 and
3. £2,500

So, the grant would be £1,719.78

The employer can if they wish to, pay the additional 20% to make up the normal salary

Employers must note that whilst employee is registered as Furloughed, they cannot carry out any work. HMRC will still have access to pay records etc

All the above is just a guide based on what we know about the scheme, this is subject to change as the scheme progresses to completion. We will keep this updated regularly.

Any questions please don’t hesitate to contact us

• Pensions – 0113 4574574
• Payroll – 0113 4574565

Or email support@workplacepensionsdirect.co.uk