As part of the Government’s Covid19 measures, they are bringing in the Job Retention Scheme. This Scheme refers to furloughing which means putting employees on temporary leave of absence where they do no work and receive no pay. The employees remain as such until you want to bring them back into work. The government will cover 80% of furloughed employees’ wages up to a maximum of £2500 per employee per month. There is no obligation on the part of the employer to pay the remaining 20%.
Employers first must choose which employees to furlough. Any employees who are in the PAYE system can be furloughed. However, you may consider it advisable to take HR advice if you are not furloughing everybody.
Once the employees have been chosen, their details including their earnings must be notified to HMRC via a special portal. The details of this portal as well as any finer details of the Scheme itself have yet to be made public. The Government have said that they hope to make the first payments by the end of
April. The grants will be backdated to 1 March 2020 and are expected to run for 3 months but the Scheme may be extended.
There are still many questions regarding the detail. However, it does seem that the 80% payments will be subject to deductions for PAYE and National Insurance and it does seem that Directors are included – but they must not work.
