KMA Accountancy – Coronavirus Help & Support Relating To Job Retention Scheme

“KMA Accountancy – Coronavirus Help & Support Relating To Job Retention Scheme”

 

 

In this video Kim talks about the The Job Retention Scheme (Furloughing) and what it means for employers and employees!

 

Hi, it’s Kim here from KMA Accountancy. I’ve just come off a webinar with my customers and other small business owners and one of the main questions was around the Coronavirus Job Retention Scheme. There still seems to be an awful lot of confusion over who’s eligible, what they can do, and how it’s all claimed. So, I thought it might be useful to take a couple of minutes just to talk about that. 

The Coronavirus Job Retention Scheme was announced by the government just a week or so ago now, when everybody was asked to effectively to go and work from home. So, as you’re aware the retail and the hospitality and leisure industry had already been quite severely affected. So, the government brought out the Job Retention Scheme which is aimed at keeping employees employed. So, rather than people laying them off or making them redundant, the idea is that you have a new category called furlough, or furloughing, however you want to pronounce it. So, basically what you do is you keep your workers on your payroll and the government will effectively pay them so that they’re not made redundant. Now, the government’s criteria is they will pay a grant of up to 80% or £2500 per employee, but they must have been on your payroll on the 28th of February. 

Now, what they will pay depends on clearly how long they’ve been with you. So, if they’ve been with you more than a year then effectively we look at the same month previous year, and if they’ve been with you less than a year it’s averaged out over the last 52 weeks. So, it needs to be available to effectively all of your workers and you need to make a decision as to who you need to continue the business and who you can’t afford to pay, because of the Coronavirus. You then need to … I have to recommend that you get HR and employment law specialist advice, because it is clearly different for different businesses, depending on your employment contracts. But in essence, what you need to do is you need to look at your employment contract, see if there is a clause to allow you to lay off, this furloughing is effectively like that, and then you’ll need to have a discussion with your workers and explain to them why they’re being furloughed etc. 

And then you’ll need to put together a letter, and there are letters out there on the internet. Again, this is where you need to speak to your HR and employment law specialist because they’ll probably have copies. But obviously you could look at the ACAS website. I’m sure FSB and other companies aimed at supporting small businesses will have templates for you to use. 

That template needs to talk about how long they’re going to be furloughed, and what they can do for you. Because in essence if a worker is furloughed they cannot do any work for you. They cannot do any services or any income generating work. They can do training, that is acceptable, but they have to paid the minimum wage whilst they’re doing that training. And they can actually volunteer, for the NHS for example, that sort of thing, but what they can’t do, clearly, is work for you or go and work for anybody else. I mean, most companies’ employment law contracts would prohibit that in any case. 

So, once you’ve obviously had that conversation, you’ve got the letter in place, obviously they go home, and they wait till the end of the period. The minimum period that you can furlough for is three weeks. Now, that is to enable you … Again, the guidance has been updated on this, initially we weren’t sure, we thought you could only be furloughed once, but now we know that it’s a minimum of three weeks, so you could bring somebody back at the end of three weeks, let’s say for a week, to help you do some services within the business and then potentially furlough them again. This is aimed at helping if somebody has gone off on … They’ve got the virus and therefore can’t work for you, so you might need somebody in the short term to cover their work. So, that’s the reason for that. So, how it works is you continue to pay your employees and then you get a grant back from the government to cover their wage costs. 

Now, it is only 80% up to a maximum of £2500, so it doesn’t include commission and bonuses. It is just their normal gross pay. So, basically you get a grant for £2500 or 80%, whichever is the lower, you would produce the payslip, obviously take off any national insurance and tax, and then the government will refund you that money, plus the employers NI and standard auto enrolment pay. 

At the moment we don’t know exactly how the repayment is going to work. We know that HMRC are working on a portal, and we believe that that will be ready at the end of April. There is no real guidance at the moment as to how that will all pan out and what process you will go through to get to that grant. But obviously we expect that you will have to keep records by your individual employees, in terms of the furlough payment and clearly input that into the portal probably, on a company by company basis. But we’ve got to wait for the guidance on that to tell us what to do. So, the important things are your employees had to be in situ with you on the 28th of February, unfortunately if they joined you after that then there is no provision under this current retention job scheme. And you must continue to pay. Now, clearly you may have to pay the April salary before the grant comes in, so you will need to look at preserving your cash to enable you to do that or look at other ways. 

That’s the main crux of the information that we have at the moment, so I’m hoping that’s allayed some of your questions and helped.

So, I hope that’s helpful. If you need any help, just shout.

Otherwise, look out for some more of my videos on what help is available.

NB – THIS VIDEO WAS FILMED BEFORE NEW GUIDANCE CAME OUT SAT 4th APRIL 2020 which gave updated guidance on the Coronavirus Job Retention Scheme the main changes were around who else could now be furloughed and now past overtime, fees, commission, bonuses and non-cash payments.

You can now claim for any regular payments you are obliged to pay your employees.

The grant can now be claimed for the following groups, if they are paid via PAYE.

  • Office Holders (including company directors)
  • Salaried members of Limited Liability Partnerships
  • Agency Workers
  • Limb (b) workers

For the latest guidance visit the Gov.uk website.

KMA Accountancy Business Survival Toolkit

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That’s it from Kim at KMA Accountancy, the most recommended and referred Accountant in South Manchester and Cheshire.

 

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That’s it for this edition of KMA’s Help videos regarding Coronvirus and help available to small businesses.

If we can help with anything included in this edition or if you’d like to talk to us about anything Accountancy or Business Development, please get in touch.

Call us now on 0161 410 0020.

 

Disclaimer
The comments above do not count as advice on which you should rely on. It is provided for general information purposes only. Professional or specialist advice should always be sought before taking any action relating to the above. We make no representation, warranty, or guarantee that the comments above will meet your requirements. The comments above are subject to change.

 

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