The Coronavirus Job Retention Scheme has been announced by the government to assist UK employers with financial support during the COVID-19 crisis, specifically where the employer would otherwise have no choice but to lay off employees.
The government website details which employers and employees are eligible for the Coronavirus Job Retention Scheme and guidance on this can be found on gov.uk.
Claims to recover furloughed pay can be made via the new HMRC portal. Qtac has produced an export to allow customers to extract the required information to submit their claim, for further information view our knowledge base article.
Setting an employee to furloughed
Please note, before proceeding you will be required to update to the latest software version for this functionality to be available. For details of how to update your 2020/21 software, please visit the relevant update page for your software package: Qtac 2020/21 update or Mamut 2020/21 update.
Select the relevant employee and navigate to Employee > Employee Maintenance, select ‘Furloughed’ from the Status drop down box.
Once selected a new window will be displayed:
If you intend to process the furlough period using your own processing method, then please click Cancel.
If you have already applied 80% to the current pay rate, select ‘Yes’ and then click Okay.
If you have not applied 80% to your current pay rate, select ‘No’. When you click Okay, Qtac will adjust your current pay rate to 80% (capping at £30k per annum) and store the previous pay rate, so that it can be reverted automatically once the furlough period ends. N.B. Automatic reverting of pay rates is planned for a future release.
Once the employee has been furloughed, all basic pay will be considered ‘Furlough Pay’. Any adjustments should be applied through Additions or Deductions.
The Employee Maintenance > Personal tab now contains two new fields for supply a start and end date of the current furlough period. The end date should be estimated and updated at a later date once the end date is known.
IMPORTANT - Variable Pay
If your employee is hourly paid and their pay varies, you must read the below guidance on variable pay. The software by default will reduce hourly-paid employees' pay rate by 20%, if their pay is variable then you must calculate and adjust their furloughed pay manually.
A new checkbox has also been added to indicate this, Qtac will take this into consideration when carrying out the claim calculation, so it is important to check this.
Current guidance on calculating furlough pay
Full or part time employees on a salary
Claim for the 80% of the employee’s salary, as of 28 February 2020, before tax.
Employees whose pay varies
If the employee has been employed for 12 months or more, you can claim the highest of either the:
- same month’s earning from the previous year
- average monthly earnings for the 2019-2020 tax year
If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work.
If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80%.
Past Overtime, Fees, Commission, Bonuses and non-cash payments
You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.
Benefits in Kind and Salary Sacrifice Schemes
The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, 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.
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.
Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.
Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.
Top-up pay / Other hours worked
You are not obliged to pay their full salary, however, if you wish to voluntarily top up their pay this should be processed as an addition which contains the term 'Top Up' within the name. The addition should have Tax, NI and Pension ticked. Any other additional pay the employee may be due, for example for hours worked, this should also be processed as an addition.
For further and more detailed information on the support available by the Coronavirus Job Retention Scheme please see the gov.uk guidance: Claim for wage costs through the Coronavirus Job Retention Scheme.