How is the 80% cost of employment calculated? Is this gross/net pay?

It is gross pay and businesses “will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month.”

Can an employer continue to pay someone their full salary and claim the 80% up to £2,500?

An employer can also choose to top up an employee’s salary… but is not obliged to under this scheme.

Is there a minimum furlough period?

Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

How does the 80% pay relate to hourly paid workers?

If the employee has been employed (or engaged by an employment business) for a full twelve 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

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.

If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

Is the payment to furloughed employees pensionable?

“Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt- out or to cease saving into a workplace pension scheme.”

For furloughed employees is there still tax and national insurance payable?

“Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employers will be liable to pay Employer National Insurance contributions on wages paid.”

How do employers evidence to HMRC that an individual is a furloughed worker?

A schedule of furloughed workers will need to be produced and submitted to HMRC through a new portal being created for the purpose. Still waiting further guidance but would assume the following information will need to be included:

  •  Business ePAYE number
  •  The number of employees being furloughed
  •  The claim period you are claiming for (minimum period is 3 weeks)
  •  Full name of employee
  • Employee NI number
  • Salary calculation (HMRC will retain the right to audit)

How will pay be calculated in the case of employees with varying remuneration e.g. those working on commission?

Commission and bonus earning are excluded.

For employees whose earnings fluctuate for other reasons you can claim the following:

  • If an employee has been engaged for a full 12 months you can claim the higher of the same month’s earnings from the previous year, or, the average earnings for the 2019/20 tax year
  • If an employee has been employed for less than a year you can claim an average of their monthly earnings since they started their employment
  • If an employee only started in February 2020 a pro rata amount can be claimed.

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