Supporting you through these challenging times

The current economic conditions are having a huge impact on us all, however it’s at times like this when, along with your adviser, we can support you and your employees more than ever.

These Q&As will help you keep up to date with what’s changing and keep your workplace scheme on track. There’s a general set of questions which focus on what you need to know and do with your scheme, as well as questions on the Government’s Coronavirus Job Retention Scheme.

We’re constantly reviewing and updating this page based on new information and guidance available.  This information is based on our current understanding of the position for employers on 10 November 2020. For more information about this scheme, have a look at the Government’s website.

Coronavirus Job Retention Scheme Q&As

The original scheme was open to all UK employers that had created and started a PAYE payroll scheme on or before 19 March 2020.  The original scheme closed to new entrants on 30 June, with the last three-week furloughs before that point commencing on 10 June.

The scheme was extended at the end of October and will now run until 31 March 2021. All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Job Retention Scheme.

It’s open to any UK organisation with employees, but there are restrictions on certain public sector organisations and those receiving public funding

The original scheme included any employees who were on your PAYE payroll on or before 19 March 2020 and were notified to HMRC on a Real Time Information (RTI) submission on or before 19 March 2020. An RTI submission notifying HMRC that a payment has been made for an employee, must have been made on or before 19 March 2020.

The scheme was extended at the end of October and will now run until 31 March 2021. Under the extension employees needed to be employed on 30 October 2020 and had to have been on the PAYE payroll between the 20 March 2020 and 30 October 2020. There has to have been a PAYE RTI submission to HMRC notifying a payment of earnings for that employee. Neither the employer nor the employee needs to have previously used the scheme. Currently the scheme is due to end on 31 March 2021, but this will be reviewed by the Government in January 2021.

Any employees not included in an RTI submission on the relevant date cannot be furloughed or claimed for as part of this scheme.

The original scheme closed to new entrants on 30 June. Employers could then only furlough the employees they have furloughed for a full three-week period prior to 30 June. So the final date by which an employer could furlough an employee for the first time was 10 June 2020.

Between March and the end of June to be eligible for the grant, employees couldn’t do any work for or on behalf of your organisation. This included providing services or generating any revenue. If an employee was working, but on reduced hours, or for reduced pay, they were not eligible for this scheme.

Since 1 July 2020, businesses were given the flexibility to bring furloughed employees back part-time. Individual firms can decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them. You’ll be responsible for paying their wages while in work.

To be eligible for the grant, you’ll need write to your employees to confirm they’ve been furloughed and keep a record of this communication. You’ll also need to discuss this with your employees and agree any changes to their employment contract.

In certain circumstances, changing employment contracts, including any changes to pension contributions or rights, will involve you communicating any changes in accordance with the relevant employment and pension law. In certain circumstances this may mean you need to formally consult with your employees.  The TPR has updated its normal rules on this to be more accommodating in these difficult times.  There’s more guidance on this on their website

When you’re making decisions that relate to the process, including deciding who to offer furlough to, you may want to get legal advice as equality and discrimination laws will apply in the usual way.

Since 1 July, you could bring employees back to work that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim the grant for their normal hours not worked.

As a minimum, you must pay them the lower of 80% of their regular wage or £2,500 per month, plus your associated employer National Insurance contributions and minimum automatic enrolment (AE) employer pension contributions on that wage.   

You can also choose to top up an employee’s salary beyond this, but there’s no obligation on you to do this as part of the scheme. You’ll also need to pay the employee all the grant they receive for their gross pay - you can’t charge any fees from the grant.

It is important to note that all the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

For March to July, the grant covered whichever was the lowest of either 80% of an employee’s regular earnings or £2,500 per month, plus the associated employer National Insurance contributions and minimum AE employer pension contributions on any subsidised earnings.

Since 1 July, you can bring employees back to work that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim the grant for their normal hours not worked.

From August, you had to pay the associated employer National Insurance contributions and minimum automatic enrolment (AE) employer pension contributions on that wage.

From September, the government paid 70% of wages up to a cap of  £2,187.50.  You needed to pay employer National Insurance contributions and 10% of wages to make up 80% total up to a cap of £2,500.

From October, the government paid 60% of wages up to a cap of £1,875.  You needed to pay employer National Insurance contributions and 20% of wages to make up 80% total up to a cap of £2,500.

Between November and March 2021 the government will pay 80% of wages up to a cap of £2,500. You’ll need to pay employer National Insurance Contributions and employer pension contributions. The government will review the scheme in January 2021.

You’ll need to calculate the 80% / 70% / 60% using the employee’s actual earnings before tax . You can’t include any discretionary fees, commission or bonuses. Any regular payments you are obliged to pay including past overtime, fees and compulsory commission payments can be included.

If the employee has been employed (or engaged by an employment business) for a full 12 months prior to the claim, you can claim for the higher of either:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019/20 tax year.

However, 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. And if they only started in February 2020, you can use a pro-rata for their earnings so far to claim.

While on furlough, the employee’s earnings will be subject to usual income tax and other deductions, so you’re still responsible for the associated employer National Insurance contributions.

From March to the end of July you could also have claimed employer National Insurance contributions on the earnings paid.

You’ll need to pay at least the minimum AE employer pension contributions on behalf of your furloughed employees. Until the end of July you could only claim back the minimum AE employer pension contributions on the earnings paid. From August you were unable to claim this from the government, you needed to pay it.

The minimum mandatory employer contribution is 3% of income above the lower limit of qualifying earnings (which was £512 per month until 5th April and is £520 per month from 6th April 2020 onwards).

There's more guidance from TPR to help you calculate claims on your employer National Insurance contributions and minimum AE employer pension contributions, this can be found on their website.

You’ll also need to consider their employment contracts, any scheme rules and how you communicate with your employees before you make any changes to the contribution levels.

Guidance from the Government makes it clear that the salary for calculating the grant should not include the cost of non-monetary benefits provided to employees, including taxable benefits in kind. Benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary.

Schemes which operate a salary sacrifice basis will therefore get back less from the Job Retention Scheme than if they didn't have the arrangement, as the salary on which the 80% grant and the minimum employer contribution is reduced.

It is important to note that all the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

Changing the salary sacrifice arrangement now will not alter the grant. The Government’s has produced some guidance. This is because the reference salary to be used for calculating the grant is as at 19 March 2020 or, the 28 February if the employer had used this date based on previous HMRC guidance or other period defined in the rules, all of which relate to the past tax year. Therefore choosing to remove the agreement after the event would not change the grant.

If an employer is “topping up” and paying 100% of an employee’s salary then an employee may wish to be removed from the salary sacrifice arrangement so they increase their take home pay at this time.

If this happens, it will have an impact on both employer and employee National Insurance contributions.

HMRC has confirmed that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contracts are updated accordingly.

There’s more detailed information available on the Governments website about:

  • What details you’ll need to make the claim
  • What happens when the scheme ends
  • Rules to follow for people on
    • unpaid leave
    • statutory sick pay
    • maternity leave
    • multiple jobs
    • training

Yes. To ensure workers who are about to take family related leave are not penalised by being furloughed, the Government has brought forward regulations which require furloughed workers planning to take paid parental or adoption leave will be entitled to pay based on their usual earnings rather than a furloughed pay rate. The regulations include;

  • Pay for furloughed workers taking family related leave is to be calculated based on usual earnings rather than furlough pay.
  • Full earnings will apply to any of the following forms of pay - maternity, paternity, shared parental, parental bereavement and adoption pay.


There are more details from the Government here.

General Q&As

TPR has confirmed they expect employers to continue making contributions into their scheme, and we would encourage any employers to do so if they can.

If the employer is concerned about whether they can meet their ongoing duties, we would suggest they speak to TPR. There’s more information about this on online

Yes.  You’ll need to continue deducting contributions from the members’ salaries.  Statutory sick pay is part of the qualifying earning rules for automatic enrolment.

However, to help in the immediate situation, the government is currently updating the rules to allow sick pay to be paid earlier. There’s more information about this online.

Employees can stop their contributions at any time. Yet if they decide they want to leave the scheme after the opt out window has ended, they’ll need to do this in conjunction with the scheme rules or in agreement with the employer.

If an employee stops their contribution, automatic enrolment rules do allow employers to stop making their contributions, but they’ll need to make sure this is done in line with any scheme rules if it’s an occupational scheme, or any previously agreed processes or contractual arrangements if it’s an automatic enrolment scheme.

If the employee and/or the employer want to re-start the contributions, this can be done, but again it will need to be in line with any agreed processes.

If the employee’s contribution stops, you’ll need to stop deducting contributions from their salary.

And similar to the previous question, you’ll need to check and see if there are any conditions that apply to minimum/matching contribution amounts of employer contribution.  Your scheme rules or employment contracts may state what happens if the employee contribution stops. 

You should also ensure you update your payment schedules to reflect the new contributions.

If you’re not paying any salaries, then you wouldn't need to make any contributions.

The Government introduced the Job Retention Scheme which provides a grant for 80% of wages, reducing to 70% in September, to 60% in October but increasing back up to 80% of wages in November and subject to certain conditions.

Until August, the grant also supported employer contributions equivalent to the minimum employer automatic enrolment contribution, which is 3% of band earnings.

There are more details on this scheme in Q&A’s below along with details of where to find out more from the Government online.

There’s more information about this online.

If you’re reducing the salary, any pension contributions you make will need to be based on the revised salary.  It’s important you check that any reduced pension contributions are still in line with any specific arrangements you’ve made with your employees.

If the scheme’s contribution basis meets the statutory minimums then yes you can change the scheme’s basis.

If you decide to go ahead and make the change, you’ll need to tell us so that we can keep a record of this in case TPR ask for evidence.  You’ll also need to let your employees know about this as well.

 

Yes, you should continue to enroll any new employees into the scheme in the normal way. 

If you’re concerned about whether you can continue to meet your ongoing duties, we suggest speaking to TPR.

Under the Coronavirus Job Retention Scheme, all UK employers have access to support measures. It’s designed to help you to continue paying your employees’ salaries during these times, and hopefully avoid having to let some of your workforce go.

However, if you do need to let some go, you’ll need to follow the normal rules and processes for terminating employment, make any final payments into the pension scheme and complete the notification of leaving process on the scheme.

There’s more information about the government’s scheme available online

To help trustees meet their ongoing responsibilities, TPR have issued a guidance note

More information

Take a look at our coronavirus hub with all of our support for you and your employees. 

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