The following is our understanding of this policy and how this will work based on the information published up to and including Midday on 15 April. It should not be relied on for final advice at this stage but is intended to give an indication of how the scheme will work.
Eligibility and qualification
This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020. Employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough.
Employees that are full time, part time, and on flexible / zero hours contracts qualify
Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their business, they may do so provided they do no more than would reasonably be judged necessary for that purpose, i.e. they should not do work of any kind that they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their business.
Calculation of the grant
The maximum grant will be calculated per employee and is the lower of:
Plus, the associated employers’ national insurance contributions (NIC) on this amount and the minimum automatic enrolment employer pension contributions on that wage.
You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.
This gives a maximum cap of £2,500 + £245 (employers’ NIC) + £59 (auto- enrolled pension contribution) = £2,804 of total possible grant that can be applied for, per employee, per month.
Pay to the employee will be subject to PAYE and national insurance in the normal way.
The ICAEW, who are working with the government on these scheme, have provided some numerical examples - https://www.icaew.com/insights/viewpoints-on-the-news/2020/mar-2020/coronavirus-job-retention-scheme-furlough-guidance
If, based on previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.
For variable / zero hours contracts, if the employee has been employed (or engaged in an employment business) for a full twelve months prior to the claim, you calculate normal pay as the higher of either:
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work until the date they are furloughed.
If they have been employed for less than a month, work out a pro rata for their earnings so far, and claim for 80%.
Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum auto-enrolment employer pension contributions you are entitled to claim.
Employment contract points
Minimum wage points
How to claim / HMRC administration
o the number of employees being furloughed
o National Insurance Numbers for the furloughed employees
o Names of the furloughed employees
o Payroll/employee number for the furloughed employees (optional)
o your Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
o the claim period (start and end date)
o amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
o your bank account number and sort code
o your contact name
o your phone number
The file should include the following information for each furloughed employee: name, National Insurance number, claim period and claim amount, payroll/employee number (optional).