Your top questions on the Coronavirus Job Retention Scheme answered

2nd Apr 2020
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On the 20th of March, the Chancellor Rishi Sunak announced that a new Job Retention Scheme will come into place and enable UK employers to access a grant to continue paying part of the salary of employees who would otherwise have been ‘laid off’.

Many of you have been asking questions about the Coronavirus Job Retention Scheme every day, so to help answer any questions you may have, we’ve collated the top 10 most common questions.

We also wanted to share the new UK Government funding support tool which has been designed to find out what financial support options you (or your clients) may be eligible for and how to access them.

Click here to start the assessment.

  • Which employees can be furloughed?

Government guidance states that in order to be able to retain an employee they must have been employed by the business before the 28 February 2020.

  • Is the furlough payment 80% / £2500 inclusive of employer costs?

No. HMRC will pay employers a grant worth 80% of an employee's usual wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.

  • Is the 80% salary normal pay only or does it include any additional earnings such as overtime and bonus?

The guidance refers to salary and this is generally defined as standard contracted values, not irregular additional income such as overtime or bonus.

  • What period will the Job Retention Scheme pay back Furlough payments for?

The government has said that the scheme will be backdated to cover payments from 1st March 2020 and will run until 31st May 2020. This is subject to review.

  • Is my employee able to do any work duties whilst they are furloughed?

No. For an employee to classed as furloughed, and to be eligible for the grant, they must not carry out any work at all.

  • Who pays the PAYE and national insurance on furloughed payments?

As this is normal income the PAYE, employee's NIC and employer's NIC liability will continue as for any other payments. The values will be included in the full payment submission (FPS).

  • Can I make up the salary for my employees to full pay under furlough?

Yes. This should be paid as a separate payment line for identification and reporting and is subject to PAYE and national insurance. You can only reclaim on the 80% or maximum cap allowed under the Job Retention Scheme.

  • Can employed directors receive furlough payments?

Yes. Company directors can be furloughed if they had a PAYE salary to calculate payments against, dividends aren't part of the Job Retention Scheme. This includes single director companies. Only company directors can continue to undertake their statutory duties while furloughed, such as filling out company accounts etc. This does not constitute revenue generating work.

  • Can you take people in and out of furlough as needed?

Employees may come back out of furlough if the business now has work for them, this should only happen at the end of the agreed furlough period.

  • Does the business have to stop trading to be able to get furlough repayment?

No. The ideas are for businesses that are still operating but would have to lay off some employees as the workload is reduced due to COVID-19.

For more information about Government support options as well as daily webinars and live Q&As please visit our Sage Hub