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Coronavirus Job Retention Scheme: Everything You Need To Know

We share details on the Job Retention Scheme implemented by the Government during this period

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The temporary Job Retention Scheme implemented by the Government will allow UK employers to access support to continue paying part of their employees’ salaries for those who would have otherwise been laid off during the crisis. The new measures aim to avoid redundancies and help both large and small businesses stay afloat during this time.

Employers can apply for grants of up to 80% of an employee’s wage for all employment costs, however, this is capped at £2,500 per month. The scheme is expected to be up and running by the end of April and is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.

Who can claim?

All UK businesses are eligible to apply for the grant including businesses, charities, recruitment agencies (agency workers paid through PAYE) and public authorities. Furthermore, where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.

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Which employees can you claim for?

Furloughed employees must have been on your PAYE payroll on 28th February 2020, and can be on any type of contract, including:

  • Full-time employees
  • Part-time employees
  • Employees on agency contracts
  • Employees on flexible or zero-hour contracts

The scheme also covers employees who were made redundant since 28th February 2020, if they are rehired by their employer.

What does this mean for your business?

You do not need to place all your employees on furlough, however, those employees who are, cannot undertake work for or on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to the usual income tax and other deductions.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.

Finally, employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

How to apply

To claim you will need the following information to enter onto a new online portal:

  • 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 three weeks)
  • Bank account number and sort code
  • Contact name
  • Phone number

As an employer, you will need to calculate the amount you are claiming. You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll. Furthermore, claims can only be backdated until the 1st March if applicable.

Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to the suitable UK bank account. You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.

Finally, when the government ends the scheme, you must decide, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).

The government have also announced additional financial support to help out small businesses. For more information, take a look at our article here.

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