Job Retention Scheme
The Government has set up the Job Retention Scheme, designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy.
The scheme has now been extended until October.
Who is eligible?
To be eligible:
- You must have created and started a PAYE payroll scheme on or before 28 February 2020
- Enrolled for PAYE online – this can take up to 10 days
- Have a UK bank account
- You can only claim for furloughed employees that were on your PAYE payroll on or before 28 February 2020.
- Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed.
- When on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue.
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities..
Employees hired after 28 February 2020 cannot be furloughed and claimed for in accordance with this scheme.
Who can you claim for?
You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.
Apprentices – Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed.
Individuals – Individuals can furlough employees such as nannies provided they pay them through PAYE and they were on their payroll on, or before, 28 February 2020.
Administrators – Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.
Company Directors – As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme.
Office Holders – Office holders can be furloughed and receive support through this scheme.
Salaried Members of Limited Liability Partnerships (LLPs) – Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.
Agency Workers (including those employed by umbrella companies) – Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.
Limb (b) Workers – Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme.
If your employee does volunteer work – A furloughed employee can take part in volunteer work, if it does not provide services to or generate revenue for, or on behalf of your organisation.
If your employee undertakes training – Furloughed employees can engage in training, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation.
How much can you claim?
You can claim for:
- 80% of your employees’ wages (even for employee’s on National Minimum Wage) – up to a maximum of £2,500. Do not claim for the worker’s previous salary.
- minimum automatic enrolment employer pension contributions on the subsidised wage
You can choose to top up your employee’s salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.
The Coronavirus Job Retention Scheme is changing from the 1st July – view updates here.
