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Coronavirus Job Retention Scheme – step by step guide for employers

Posted by: Alicja Bielawska
Posted in: News
Date published: 21/04/2020

The governmental guide published recently on-line provides the employers with information how to make a claim for reimbursement and what are the requirements for such application.

Firstly, it guides through eligibility criteria that has to be met before the application is considered by the employer and submitted.

The employer must agree with employee and subsequently notify that that they are ‘furloughed worker’ for a minimum period of three weeks, when no work should be performed by the employee. The designed employee should be on PAYE payroll on or before 19 March 2020 and an RTI submission notifying payment in respect of the employee to HMRC must have been made on or before 19 March 2020. The claim of 80% of wages up to maximum of £ 2,500 per month will be paid to employer’s account with an UK’s bank.

The employer may choose an agent to act on his behalf (for instance, a solicitors – author’s note) or act for himself. In any event the payment will be made to bank account chosen by the employer within six days after the application is submitted.

The employer will have to provide the following information when making the claim:

• The number of employees being furloughed;
• The dates employees have been furloughed to and from;
• Details of employees – the name and National Insurance Number of each of them;
• Employer’s PAYE scheme reference number;
• Employer’s Corporation Tax Unique Taxpayer Reference, Self-Assessment Unique Taxpayer Reference or Company Registration Number;
• Employer’s UK bank details;
• Employer’s (organization’s) registered name;
• Employer’s (organization’s) address.

The total amount that will be claimed consists of three parts:

• 80% of employee’s wages up to maximum of £ 2,500 a month per employee;
• The total employer’s NICs;
• The total employer’s pension contributions (up to 3%).

In order to calculate the grant for gross pay, the employer should take number of days that remain in month when the employee has been furloughed (so if employee was placed on furlough on 21 March, it will be eleven days). Then employer will divide employee’s gross salary from the preceding month and divide it by number of days in month for which the claim is being made. Once the gross pay per day is calculated, it should be multiplied by the number of days that remain in this month, in this scenario eleven. Then this amount will be multiplied by 80%.

In order to calculate grant for employer’s National Insurance Contributions the employer should establish NICs relevant for the total gross pay that the employee should get in certain month. Once the amount is established, it should be divided by the number of days in this month. Then, the daily employer’s NIC will be multiplied by number of days that remains in the month, just like in gross pay example.

Last but not least, the grant for employer pension contributions. The monthly lower level of qualifying earnings will be apportioned based on the number of days in the month to the qualifying furlough days, similar like in previous examples. Now the calculated amount will be deducted from 80% of gross pay, then the number should me multiplied by 3%.

Once the value of the claim is calculated (so all the tree components summed up), the employer will need to have a Government Gateway ID and password and active PAYE enrolment. The confirmation and the claim reference number that appears on the screen should be printed or noted down. The confirmation email will not be sent.

The government will require more details if the employer has more than one hundred employees.

For further information, please contact Alicja Bielawska on 0330 107 0106 or email business@imd.co.uk .

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.