Hospitality Industry Coronavirus Job Retention Scheme - Q&A

April 16, 2020

Firstly, we would like to thank all of your for participating so much in the Q&A section of the webinar - by sharing your questions we were able to provide answers that will have helped lots of other fellow business owners and leaders in your industry.

Secondly, there have been A LOT of updates and changes in guidance in the last week, so please note the following items differ to the answers in the webinar depending on when your live Q&A occurred!!

A quick recap on the scheme:

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. HMRC expect this to be up and running by the 20th of April. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).

If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

This is a temporary scheme in place for 3 months starting from 1 March 2020, but it may be extended if necessary and employers can use this scheme anytime during this period. It is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.

You must have:

Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.

**Newsflash 14.04.20**

Last week we had confirmation that the scheme will officially open for applications on the 20th of April.

You do need to have an online Employers account with HMRC - you can apply for this here https://www.gov.uk/register-employer

Remember that the activation code for your application will go to the business registered address and has to be operated within two weeks of issue, so apply ASAP.

We have had one client confirm this morning (14/04/20) that HMRC agreed to send the activation code to her email and home address instead so do ask for this if you do not have access to your business registered address at this time!

It should also be noted that all DEA (Deduction of Earnings Attachments), that is debt from Universal Credit overpayments, have been suspended temporarily - you should enact a stop date of 31st of March until further notice. This does not affect any other attachments of earnings such as Child Support or Council Tax deductions.

**Newsflash 16.04.20**

HMRC have sent an update on an important change to the scheme relating to employee eligibility:

More information on this can be found on GOV.UK.

How to claim

As you prepare to make a claim, please note:

Information you will need before you make a claim

In addition to the information in our previous email, you will need to have the following before 20‌‌ April 2020:

  1. Name.
  2. National Insurance number.
  3. Claim period and claim amount.
  4. PAYE/employee number (optional).

Click Here to listen to the United We Stand (Hospitality Industry) Webinar 08.04.20

Questions & Answers

I have part time or seasonal staff, how do I calculate their average pay for furlough payments?

You would take the average hours they have worked over the past 12 months/52 weeks or for however long they have worked for you, for example if they worked 100 hours over 10 weeks you would pay them 10 hours a week as furlough pay x basic rate.

How do we calculate the ER NICS if we aren't claiming the whole wage (because of the £2500 max)?

There are a couple of interpretations on how to proceed with this question - we must stress that guidance is being issued every couple of days so do keep checking official HMRC guidance on this point before you make your claim.

One way to calculate:

You would claim for the ER NIC based on the furlough amount, so for example if the furlough amount was 80%, you can claim 80% of the ERNIC

Other way to calculate:

You would take the furlough amount, minus the Secondary Threshold (£719 for March and £732 from April) and multiply the remainder by 13.8%

If you need to choose an option we would recommend the second option - your claim will be lower but it means you have no possibility of over claiming.

The National Minimum Wage has increased to £8.72 this week. Do I use the new higher rate in my calculations of employees’ wages and reclaim.

You do not need to use the new NLW or NMW rates per normal statutory rules for furlough workers whilst you are reducing the pay to 80%, these rates only apply to hours physically worked, so do not apply to a furloughed worker as they can not do any work for you during this time. You must apply them if you take a worker off furlough.

I have pivoted my business – for example changed to takeaway/delivery services. I have furloughed staff that cannot do this type of work - for example maybe some don’t have a driving license/chef skills – can I hire more staff if I have some on furlough?

Yes, you can still hire staff whilst you have other staff on furlough, if you have a justifiable reason for not bringing the furloughed employee back - for example they may be shielding from the virus, or they may not have the required skills for the available roll.

Are my staff accruing holiday pay? Can I ask them to take some of their holiday during the period we are closed?

Yes your staff continue to accrue holiday pay whilst on furlough, and you can ask them to take some their holiday during this time, which would mean you would top up the 80% to 100%.

If you have staff you are already topping up to 100% you do not pay them any extra.

If you have staff that work variable hours you would calculate the average hours that you are going to pay them, and this is the same number of hours they would accrue holiday on.

If my employee has a full time job during the week, Monday to Friday and works in the pub at the weekends - can both employers put them on furlough as well? Will the Government pay out twice for one employee but two employers ?

Yes, the same employee can be furloughed from more than one employment and the government will reimburse each individual employer for the furlough wages.

Are furloughed wages paid net or gross?

Furlough wages are calculated gross for the claim to HMRC, but paid net to the employee after the normal tax, NIC and student loan deductions have been made.

As a sole director of my company, am I entitled to furlough myself as it is a restaurant and I have no income?

A director may furlough themselves and continue to do some mandatory tasks associated with their office, such as file accounts or maintain supply billing etc, but they cannot be seen to have generated any revenue whilst they are claiming furlough wages as a CJRS grant.

Does the 3 months of the scheme run from March - May or from when you first furlough an employee?

The 3 months that the scheme is open runs from March -> May, it does not start from when you first furlough an employee. The Chancellor has said the government will review this after the 3 months, but there is no indication at the moment that this will be extended.

Are tronc payments included in the furlough amount, if they are contractual?

HMRC have stated that all compulsory contractual payments must be honoured but tronc payments do not count at this moment in time:

This means that the following payments are included when working out the 80% share:

While the following payments are excluded:

Can I furlough staff on sick leave? If not, how does the Covid-19 SSP rules work?

If staff are sick with the Coronavirus or self isolating you can pay them SSP for up to two weeks and reclaim this from the government in future.

The reclaim scheme can only be used by employers if they:

You can only pay SSP if an employee has been off for 4 days of more in relation to the virus, at which point you can pay SSP for the whole of the sickness, you do not have to take off the 3 waiting days as you do with other sickness.

You should ask your staff member to provide you with a sick or isolation note which they can obtain from NHS online.

If a staff member is shielding (i.e. they are vulnerable to the virus and have to stay home but do not have the means to continue working from home) you can furlough them.

SSP is paid at £95.85 per week. As of updated guidance on 09/04/20, if an employee is sick they can be furloughed in order to be paid the higher amount. All the same furlough rules will then apply.

What can I do to reduce some costs to help my cashflow?

Register for Time to Pay, so you can delay your PAYENIC payments for up to 3 months - please note HMRC could charge interest for a delayed payment so make sure that you really need to delay the payment or try and ask HMRC for an interest level before making the agreement https://www.gov.uk/difficulties-paying-hmrc

Keep yourself up to date with every new initiative in case there is a change to the guidance that will benefit your business, and consider outsourcing - if you only have half a job available for a staff member that could be furloughed, see if there is an outsource that can do it for you to allow you to furlough the employee.

Lots of business services have changed their contractual terms due to this crisis, with many offering just 3 or 6 month terms and plenty offering free advice.

If you have a friend or business associate that is struggling with their payroll requirements, Pay Check are offering short term contracts - please ask them to get in touch.

This article was written by
The Pay Check Team
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paycheck@paycheck.co.uk

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