The last few weeks feel like months – so much has happened and businesses have gone from ‘business as usual’ to ‘closed for the foreseeable’ within a heartbeat. The government has arranged comprehensive support measures, but they’re mostly inaccessible as payday looms – so what should you do?
Coronavirus Job Retention Scheme
This scheme will see the government supply 80% of each employee’s usual monthly salary so that you can continue to keep them in employment during this temporary crisis. HMRC will reimburse you for 80% of any furloughed worker’s wages up to a maximum of £2500 per month and employers can top up this amount if they are able to – but this should at least help your employees survive financially for the time being. The funds are backdated to the 1st March, but with the end of month payday looming some business owners are currently crunching the numbers trying to figure out how they will pay their team this month.
The government also announced that they would cover National Insurance Contributions and Auto Enrolment Pension contributions.
Gig workers and those on ‘zero hour contracts’ are included in this scheme and an average of their monthly salary for the tax year 2019-20 (or whatever months they have been working for the company if they are more recent) should be used to make the 80% calculation.
Full, up to date, details of the Coronavirus Job Retention Scheme can be found here on the government website.
Employees must be designated as ‘furloughed workers’ and will need to be notified of this change in writing, so we advise you contact an employment law specialise for an appropriate document to issue to staff – you can also access our free template letters here. Staff are not permitted to undertake any work for the business while furloughed.
To claim the grant you will need:
- your PAYE 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 weeks)
- your bank account number and sort code
- your contact name
- your phone number
This information will need to be submitted through an HMRC online portal, which at the time of writing (27/03/2020) is not yet available. So for now keep your records in order, send the appropriate paperwork to your employees and wait for further instructions.
Please note: If you are a Warr & Co payroll client then our team should be able to deal with claiming this grant from HMRC for you, please get in touch with us and send the details of your furloughed employees.
If You’ve Let Workers Go Already
The good news is that if you’ve been pressured by the current crisis into letting employees go during March, you can re-hire them and furlough them right away, and we would suggest doing so where appropriate to ensure you have your workers available once restrictions are lifted.
How Do We Pay Employees This Month?
The good news is that support is on its way, but the bad news is that it’s not ready to go into your bank account just yet. We are aware that the end of April has been set as a provisional date for the grants to be paid – but this is an unprecedented event and we can’t be sure that all businesses will receive funds in a timely manner… But you still want to pay your employees to ensure they can manage.
If you don’t have the funds available speak to your own bank first – almost all the banks are enrolled in the government’s Coronavirus Business Interruption Loan Scheme
Remember to speak with your accountant as every business will have their own specific challenges to overcome at this time.
What About Owners?
There isn’t much good news for business owners at this time. Most of whom will pay themselves dividends and a small salary. We now understand that owners and directors can furlough themselves and may still undertake essential business administrative duties while claiming 80% of their average salary. But with many opting to maximise dividends and minimise salary this doesn’t work out at a great deal of support on average.
Last night (26/03/2020) help for self employed workers was announced by HMRC but this assistance still excludes the likes of owner managers, PSCs.
Unfortunately at this time we have no avenues for these groups of worker, but we are pushing for answers and clarification from the Government.
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