Coronavirus Job Retention Scheme

As announced by the Chancellor on 20 March 2020, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that are currently subject to lay-off working.

This applies to employees who have been asked to stop working but who are being kept on the payroll, otherwise described as ‘furloughed workers’. HMRC will reimburse 80% of their wages, up to £2,500 per month. This is to safeguard workers from being made redundant, which is the permanent measure that may follow a period of lay-off working.

The scheme will cover the cost of wages backdated to 1 March 2020 and is initially open for 3 months, but may be extended if necessary.

HMRC will set out more details in the coming weeks, including:

  • Who is eligible;
  • What costs will be covered i.e. still unclear if £2,500 per month cap is the employee costs only OR if it also includes the employer costs (such as Er’s National Insurance, Pension and Apprenticeship Levy); and
  • The process for accessing the grant (which we believe will be via a portal system, potentially linked to the RTI system, but which is still under construction by HMRC).

Please note that our understanding is that this is not a mandatory scheme i.e. the employer can, for whatever reason, choose not to access the grant for its employees.

Likewise, anyone currently subject to Statutory Sick Pay (SSP) and / or claiming other statutory benefits may not be entitled to the grant.

The self-employed

If you are a worker operating through your own limited company (Personal Service Company - PSC) then you should talk to your Accountant / Tax Adviser to see if there is scope to access the grant. Although not yet confirmed, this will likely be subject to your PSC having a PAYE scheme and more importantly may only be worthwhile where a sufficient enough element of your remuneration from the PSC is in the form of salary i.e. dividend income is unlikely to fall within scope of ‘wages’.

If you are a worker engaged on a contract for services under an Agency PAYE payment model then our understanding is that you will likely not be eligible for the scheme. Although you may be deemed an employee for tax purposes, you are still self-employed and therefore will not necessarily be entitled to the grant (via Scantec). We hope to have final clarity on that point in the coming weeks and will share that with the relevant workers at that time. In the meantime, we would urge workers operating under Agency PAYE agreements to focus their attention on the anticipated Government announcement on support for the self-employed.

If you are a worker engaged via an Umbrella payment model our understanding is that you could potentially fall into scope of the scheme, as you may be recognised an ‘employee’. However, given the final details of the scheme have still to be announced we must be very clear in stating that this is not a foregone conclusion and that it is very much at the discretion of your Umbrella provider who may or may not utilise the Scheme. As yet there is no information to Umbrella providers as to eligibility or indeed how the scheme may work. When the rules of the scheme are announced we advise you to make contact with your Umbrella provider to discuss the matter further.

Our clients

This is a particularly difficult time for businesses in terms of managing human resource, whether that be their permanent or temporary workers. At Scantec we ourselves are currently operating at 50% capacity for the foreseeable future, however remain committed to delivering a service for new and existing clients in line with our core values. We therefore invite conversations from businesses to discuss their ongoing labour provision, with a view to supporting where we can.