How To Claim For Your Employees' Wages Through The Coronavirus Job Retention Scheme (CJRS)
Many clients at McDade Roberts have been in touch to discuss the Coronavirus Job Retention Scheme therefore we thought the below blog would be of interest to many people in the Lancashire area.
Overview of the scheme
The principle behind the CJRS is that If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (C19), you can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
This is a temporary scheme in place for 3 months starting from 1 March 2020, but it may be extended if necessary and employers can use this scheme anytime during this period. It is designed to help employers whose operations have been severely affected by C19 to retain their employees and protect the UK economy.
Who can claim?
You must have created and started a PAYE payroll scheme on or before 28 February 2020, enrolled for PAYE online and have a UK bank account. Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed.
To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed. While on furlough, the employee's wage will be subject to usual income tax and other deductions.
Agreeing to furlough employees
Employers should discuss with their staff and make any changes to the employment contract by agreement. To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.
How much you can claim
You will need to claim for:
- 80% of your employees' wages (even for employee's on National Minimum Wage) - up to a maximum of £2,500.
- minimum automatic enrolment employer pension contributions on the subsidised wage
You can choose to top up your employee's salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.
Grants will be prorated if your employee is only furloughed for part of a pay period.
Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they written to confirming their furloughed status.
Employees whose pay varies
If the employee has been employed for 12 months or more, you can claim the highest of either the:
- same month's earning from the previous year
- average monthly earnings for the 2019-2020 tax year
If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work. If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80%.
Employer National Insurance and Pension Contributions
You'll still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees, and you can claim for these too.
Past Overtime, Fees, Commission, Bonuses and non-cash payments
You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.
What you will need to make a claim
To claim, you will need:
- your ePAYE reference number
- the number of employees being furloughed
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- your bank account number and sort code
- your contact name
- your phone number
It is the employer's responsibility to make the claim. Please contact us if you need help in calculating the claim. HMRC will retain the right to retrospectively audit all aspects of your claim.
The full guidance can be found at: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme#history