The Government has set up a new Coronavirus Job Retention Scheme. Under this scheme,
the government plans to step in and help pay the wages of people who would otherwise be
laid off without pay or made redundant as a result of the Coronavirus crisis. Under the Job
Retention Scheme, any such employees would be “furloughed” (only temporarily laid off).
Key policy objectives of the scheme
Overall objective is to keep people at home while enabling employers to retain staff who
will be needed when they begin to rebuild their businesses in the future. This will enable
work to begin again with a critical core who have the necessary knowledge.
Relevant employee, Pay & Administration:
- including directors or shareholders of owner managed business who are already in the payroll on 29 th February 2020.
- Member of staff should not work for the employers during furloughed period.
- Employer will pay contractual amount & RTI of the same as usual.
- Employer will claim the grant separately when portal is ready.
Grant (not a loan) – Per employee per Month up to 3 months
Grant is lower of
- 80% of the contractual payment or
- £2500.
Illustration
XYZ Ltd employs Mr A at an annual salary of £24,000, so £2,000 per month. Mr A has opted
out of auto enrolment and employer NIC of the same £174
The available grant for the employer is the lower of
(a) 80% of (£2,000 + £174), and
(b) £2,500
So, a grant of £1,739.
The cash required by XYZ Ltd to furlough based on maintaining the existing salary is £435
per month. It is a matter for employment law whether the employer is required to pay this
top up. Discussions with employees may have agreed that the employee has agreed to a
different arrangement during their furlough.
The £2,500 monthly grant covers all employment costs, i.e, salary, employer pension
contributions required by auto enrolment (if applicable), and employer NIC.
AcuAccounts have also created a draft letter to help with advising Employees they fall under
the ‘furlough’ scheme. Please click on the following link to view the template here.
This letter must be transferred to your own letterhead, removing the title and all
references to AcuAccounts and with all optional and personalised information completed.
- This letter can be used to inform employees that you will be designating them as a
furloughed worker in line with the government’s Job Retention Scheme. - This will provide you with a grant to cover 80% of wage costs, to a maximum of
£2,500 per month. - You are not required to make up the remaining 20% of wage costs, however, you can
if you wish. You should ensure that your position in this regard is covered in the
letter by including, amending or deleting the relevant clause. - This letter should be used only after you have discussed furlough with the employee.
Need further clarification contact our team.
#Employer #Employee #Salary #Wages #PAYE #business #update #coronavirus #covid19 #income #support
Recent Comments