In its latest April bulletin, the guild of cleaners and launderers published a guide to the Coronavirus Job Retention Scheme, compiled by the guild accountants, Lemans.
The UK Coronavirus Job Retention Scheme provides support to all UK employers to continue to pay part of their employees' wages to those who would otherwise have been made redundant during the crisis. This system is available to all employers and there are no requirements.
Qualifications and calculation of the grant
To qualify for the vacation grant, employees must be on your payroll on February 28, 2020. Employees who have full-time, part-time and flexible / zero hour contracts are qualified.
You don't have to take all of your employees on vacation. The minimum duration of vacation and qualification for the scholarship is 3 weeks.
The government will fund 80% of the labor costs for workers on leave up to a limit of £ 2,500 per month plus the associated employer NIC and the minimum contribution to the automatic enrollment of employers. For full-time and part-time employees, the actual salary of the employee before tax as of February 28, 2020 should be used to calculate the 80%.
Fees, commissions and bonuses should not be included in the calculation. Employers can use this grant system at any time during this period. It is at the employer's discretion to fund the 20% difference.
The government has confirmed that only 80% of employment costs are funded through the grant system. Social security contributions by the employer and minimum pension contributions by the employer to automatically register for an additional top-up salary are not financed by this system. Also voluntary auto-enrollment contributions that are above the employer's mandatory minimum contribution of 3% of earnings above the lower limit of qualifying earnings (£ 512 per month until April 5 and £ 520 per month from April 6, 2020).
For variable hour / zero hour contracts, calculate the normal wage as the higher of the following if the employee was (or was in a job) a full twelve months prior to the application:
The result of the same month from the previous year or
The average result for the tax year 2019/2020.
If the employee is employed for less than a year, you can claim an average of their monthly earnings since they started working. If the employee only started in February 2020, use a pro-rata amount for their previous income. Once you have figured out how much of an employee's salary you can apply for, you need to calculate the amount of the employer's NIC and the minimum employer pension you are entitled to.
PAYE, NIC and pension contributions continue to apply as usual to grant payments to employees on leave. Employees therefore remain on the payroll with 80% of gross salary, subject to the maximum cap of £ 2,500 per month.
If an employee works on reduced working hours and reduced wages, he is not eligible for this system and the grant is not available for his wages. Employees who are on unpaid leave can only be taken on leave if they were placed on unpaid leave after February 28th due to Covid-19.
If you have already fired someone for a corona virus after February 28, the employer may choose to return you as an employee on leave and the termination can be reversed. Again, this is at the discretion of the employer and not a decision of the employee.
Employees who are on sick leave or self-isolating should receive SSP and can then take leave. Employees who are shielded according to public health guidelines can be taken on vacation.
The workers concerned must be referred to as 'on leave workers' and must be informed in writing of any change in their employment status in accordance with applicable labor law. It is likely that most employees will agree to the terms. For those workers who disagree, they either have to take unpaid leave indefinitely, or employers are likely to have to take the layoff route. Employment status for workers on leave will change, but their employment record remains constant. The employer has to decide whether to leave the employee on leave, it is not an employee decision, although the employee has to agree to it. When employers make decisions about who should go on vacation, equality and discrimination laws apply in the usual way.
Vacation is a compulsory break from work and workers on leave are not allowed to work on behalf of their employer. In addition, they cannot accept work from another company or be paid for it. It is practically as if they are on a garden vacation. You can do voluntary work, for example for the NHS and other organizations that support communities during this time. Employees can attend training while on vacation as long as they do not provide services for or on behalf of the employer, or generate income. If employees have to complete online training during their vacation, they must pay at least the NLW / NMW for the time they have spent on the required online training, even if this is more than 80% of their wages on vacation under the grant program receive.
National living wage / national minimum wage
Individuals are only entitled to the national living wage (NLW) / national minimum wage (NMW) for the hours in which they work.
As a result, non-working workers on leave must receive less than 80% of their salary or £ 2,500, even if this would be less than NLW / NMW due to their usual working hours.
For example, if employees have to complete online training while on vacation, they must receive at least the NLW / NMW for the time spent on the training, even if this is more than 80% of their wages subsidized.
What you need to make a claim
The HMRC portal for submitting claims is expected to be available at the end of April 2020. Employers should discuss with their employees and make changes to the employment contract as agreed, as described above.
Employers may need legal advice on this process. If a sufficient number of employees are involved, collective consultation processes may be required to reach agreement on changes in employment conditions.
To claim, you need:
- Your PAYE reference number
- the number of employees on leave
- the claim period (start and end dates)
- Amount claimed (per minimum 3-week vacation period)
- Your bank account number and routing number
- Your contact name
- your phone number
You need to calculate the amount you are claiming. HMRC reserves the right to review all aspects of your claim retrospectively.
You can only make one claim at least every 3 weeks. This is the minimum period for which an employee can be given leave. Claims may be backdated until March 1, if applicable.
As soon as the HMRC has received your claim and you are entitled to the grant, it will be transferred to a UK bank account by BACS payment.
You should file your claim in accordance with actual settlement amounts at the point at which you complete your settlement, or before any upcoming settlement.
You must pay the employee the entire grant that you receive for his gross salary. No fees can be charged from the money granted. You can top up the employee's salary, but you don't have to.
When the government ends the program
When the government ends the program, depending on your circumstances, you need to decide whether employees can return to their jobs. If not, it may be necessary to consider termination of employment (dismissal).
Employees who have been on leave have the same rights as before. These include statutory entitlement to sick pay, maternity rights, other parental rights, rights against unfair dismissal and dismissal payments. They continued to work while on vacation.
Once the system is closed by the government, the HMRC will continue to process the remaining claims before the system ends.
Tax treatment of the Coronavirus Job Retention Grant
Payments a company receives under the system are made to offset these deductible income costs. They must therefore be included as income in the company's calculation of taxable profit for income tax and corporate tax purposes in accordance with the usual principles. Businesses can deduct employment costs as usual when calculating taxable profit for income tax and corporate tax purposes.