What Coronavirus financial assistance can SMEs get from the Government?
Over the weekend, the Government has updated the guidance on claiming financial assistance for employees, relating to Furlough leave and Statutory Sick Pay (SSP).
This is the position as of Saturday 4 April 2020 and may be subject to change.
Furlough Leave (the Coronavirus Job Retention Scheme)
This scheme is in place until 31 May 2020, when it will be reviewed. We anticipate that it will be necessary for the Government to extend it beyond this date, but will have to await confirmation nearer the time.
All employers can use the scheme, provided that you had a PAYE payroll scheme set up on or before 28 February 2020.
All staff who were on your PAYE payroll scheme on/ before 28 February 2020 are eligible – including employees, workers, zero hours staff, and apprentices.
Anyone not on your payroll (eg self-employed contractors, consultants, agency workers, etc, may be able to claim financial assistance through another means).
Employees who are sick leave cannot also be furloughed and you cannot claim for them. They should be paid sick pay in accordance with their contract of employment.
Employees who are self-isolating cannot also be furloughed and you cannot claim for them. Self-isolation applies to people with symptoms of coronavirus or sharing a household with someone with symptoms of coronavirus.
The self-isolation should last seven or 14 days in accordance with Government guidance. If they cannot work from home during self-isolation, they should be paid SSP in accordance with Government guidance.
However, they may have an expectation of receiving enhanced sick pay if this is in accordance with their contract of employment and, if you cannot or do not intend to pay this, you should issue clear information to all staff.
If employees are shielding …
Employees who are shielding can be furloughed. Shielding applies to extremely vulnerable people who have been told not to leave their homes and to minimise non-essential contact with people even in their own household.
Relevant people should have received a letter telling them to “shield” from the NHS/ Government and, if they feel they’ve been missed off the list, they should contact their doctor. If they cannot work from home, you can opt to furlough them.
If employees are carers …
Employees who cannot work because of care responsibilities arising from Coronavirus – for example if they are caring for children at home – can be furloughed. This indicates that you could use this as part of your selection criteria for choosing who is furloughed.
If employees are on statutory leave …
Employees on statutory leave, such as statutory maternity leave, will continue to receive their statutory payment and the employer can continue to claim 92% of this back from the government – as usual.
If the employee has an entitlement to enhanced pay for this leave such as enhanced maternity pay in accordance with their contract of employment, they should still receive this, and the employer can claim a proportion of the enhanced payment through the furlough leave scheme.
Furlough leave must be for a minimum of three consecutive weeks. Furlough leave can be rotated amongst staff or staff can be brought in and out of work, but each period of furlough leave must be three consecutive weeks.
What happens if you need help from furloughed employees?
Employees cannot work for you during furlough leave – they can’t provide services to you, your business or your customers, and they cannot do anything that would generate revenue.
This means that you cannot claim for employees who are working reduced hours, or carrying out limited duties – for example, you could not claim if you have a financial controller who is not working other than to operate payroll. However, that financial controller could be furloughed for three weeks, return to work to do payroll and then furloughed for another three weeks.
A newly announced element is that an employee can continue or even start a secondary employment while on furlough leave. They may need your consent to do this, depending on the wording of their contract.
An employee can carry out training whilst on furlough leave, as long as it doesn’t count as providing services or generating revenue. For example, they could complete online training modules for continuing professional development.
In terms of pay for training, providing that the furlough payment of 80% salary gives them at least National Minimum Wage for all hours of training, you do not have to top it up.
Employers should agree furlough leave with employees and confirm the details in writing. The employer should keep a record of the above written confirmation for five years.
What can employers claim?
It has been clarified that employers can claim 80% of employees’ wages up to a maximum of £2,500 per employee based on normal salary where the employee gets a fixed salary, or the higher of:
- The same month’s earnings in the previous year
- Average monthly earnings for the 2019/2020 tax year
- The employer’s minimum 3% pension contribution on the subsidised amount
- The employer’s National Insurance contributions on the subsidised amount.
Employers can choose to top up the employee’s pay, but don’t have to. They cannot claim for this top up, or any related pension contributions or National Insurance contributions.
The claim for 80% of wages can include any regular payments that the employer is obliged to pay out, and we believe this includes car allowances and overtime payments or ‘compulsory’ commission (if owing or included in the average monthly earnings) past overtime.
The claim cannot include discretionary bonuses or commission, tips, benefits in kind, salary sacrifice schemes, or other non-cash payments. HMRC agree that the current Covid-19 situation is a “life event” and that staff can therefore be permitted to chance salary sacrifice arrangements should they wish to do so.
The updated guidance is available in full here and is worth a read: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Claiming Statutory Sick Pay
Only employers who had a PAYE payroll scheme on or before 28 February 2020 and had fewer than 250 employees at 28 February 2020 can claim.
Employers can claim financial assistance if they have paid SSP to an employee who is unable to work because:
- They have Coronavirus, or
- They are self-isolating at home – this will include someone with symptoms of Coronavirus (who must self-isolate for seven days) or someone who shares a household with someone who has had symptoms of Coronavirus (who must self-isolate for 14 days).
If the employee falls into one of the above categories, SSP should be paid from day one of the absence rather than day four.
The assistance is limited to repayment of the SSP paid out and up to a maximum of two weeks. It only applies to periods of sickness falling on or after 13 March 2020.
The employer doesn’t need to have doctor’s notes from the employee, but will need to have kept a record of the following (and must keep this information for three years):
- The reason why the employee couldn’t work
- The start and end date of that period
- The details of the SSP qualifying days in that period
- The employee’s National Insurance number.
It doesn’t appear necessary for the employer to have the employee’s 111 isolation notice, but we believe this is still worth requesting to ensure that the employee’s claim for SSP is valid under the scheme.
The details of the scheme are here: https://www.gov.uk/guidance/claim-back-statutory-sick-pay-paid-to-employees-due-to-coronavirus-covid-19
For help with any of these matters, or other aspects of HR or employment law, please contact New Dawn Resources.