Practice English Speaking&Listening with: COVID-19 Response - Job Retention Scheme - Chapter 1 - Overview and eligibility

Welcome to Invest Northern Ireland's Covid-19 Response webinar series.

Good morning everyone. Today we are going to look at the Job Retention

Scheme and for anybody who was on the previous webinar that we did, do not worry

too much because I am going to look at some of the basic points in relation to

the scheming principle. More importantly, I am going to look at all the

updates since our last session on this and in particular I am going to look at

the portal or rather the government gateway which has now opened. Four

things broadly, that I am going to look at today. We are going to look at and give an

overview of the Job Retention Scheme and eligibility. We are going to look at some

key business concerns that we know you, like many other businesses in Northern

Ireland are facing. We are going to look at the 'how to' of furloughing workers in

relation to this scheme. As more guidance becomes clearer, then the scheme

itself becomes a lot more crystallized in a sense.Then we are going to give

a very quick summary of the various updates that have come through in the

last week to ten days and we are going to finish with quite an extended Q&A

session as Rodney has said. A lot of you have sent in certain questions in

relation to furloughing, in relation to the scheme and now in relation to the

portal. We are going to seek to deal with all those questions as they arise

as we run through this. It is important always to bear in mind that

we are going back to some of the basics in relation to the Job Retention Scheme.

I am going to spend a couple of minutes now looking at the scheme

overview and eligibility. Let us start with the overview. Let us bear in mind

this is a temporary scheme. It is a grant, it is not a loan. In one sense it is

free government money but like any free government money, we need to make sure

that we are aware of the detail. Who can apply? How it applies? and When we can

realistically expect monies to be recovered from HMRC. In principle, it

is a scheme which would encourage employers to retain employees as

opposed to considering redundancies or layoff. Now we are going to

look at eligibility, business eligibility laterally, so let us not worry

too much about that. Let us certainly not get confused by the Irish scheme, the

ROI scheme, which is much more invasive in terms of business scrutiny. That is

not a feature of this scheme, albeit the HMRC does reserve a number of checks and

balances in relation to this scheme which all employers need to be aware of

and we will come to those. It is a scheme which is available for all UK organizations.

That as employers, charities, etc with employees on PAYE and that is critical.

When you get into the portal and you begin to answer the questions you will

see that this is all conditional on the individuals, whether its employees, casual

workers, zero-hour contract workers or even consultants in certain circumstances.

As long as they are on the PAYE payroll system that you have been running so

HMRC can recognize the individuals, there is scope for you to unlock this

scheme. The scheme itself when the Chancellor first announced it on the

18th, 19th of March indicated that claims could be backdated to the 1st of

March in certain circumstances and that it would run for 3 months. Now that has

just been extended by at least one more month, so we know that the scheme is

running at least until 30th June 2020 and possibly longer then. He has always

said it might be extended but for now it is running to the 30th June 2020 at

least. Now, the portal, the HMRC portal which everyone has known about and talked

about for quite some time. It is now open. It opened yesterday. There are already a

number of teething problems with it. No surprise in principle, but equally

we are going to talk through some of those and see how people can best use

this. I suppose if that is how we do it, well now we have to think about

What can you actually claim? It starts with 80% of wages. Wages is

broadly defined, I will come back to that, up to a cap of £2,500 per

month, per employee. Wages is not just gross base salary, this is why I said

it is broader than that. It also includes employer national insurance

contributions, plus minimum auto- enrollment employer pension

contributions on the subsidized wage, i.e. on the reduced level. Whether it is 80%

of whatever the wages were or up to the £2,500.

It is the employer nick's on those and the auto enrollment pension

contributions on those. It is paid gross and we also understand that the employees

must still be responsible for employee income tax, employee pension

contributions and within that, bear in mind, that if there are any other

contractual payments which the employee has in the past, permitted to be deducted

from normal pay those will continue to roll through. If an employee is making

any other contributions to various funds or pots within the workplace, those will

not be covered by furlough but they will continue to come out of whatever monies

are actually paid to the individual employee. If they need to make certain

arrangements with their bank or building society, again, they should be doing that.

They should be aware that until such time as they tell the employer to stop

or to have a holiday in relation to those deductions and payments, they will

continue to be made.

Employers can choose to top-up salary payments with the additional 20%.

Being the 80% of wages so the additional 20% on top, but they

do not have to. Bear in mind that if they do choose to do that, then the employee

will also ask the question, Well are you also adding on the additional 20%

in relation to auto-enrollment pension contributions etc? If an employer

elects to top-up the salary payments, just bear in mind some of the hidden

costs with that also. Then one of the latest points that the government guidance

has confirmed is that, when an employer recovers these

monies they must pay or must already have paid the full amount of the grant

to the employee i.e. the employer cannot hold it, cannot make any other deductions,

cannot seek to clawback any other monies that the employee may owe etc.

Whatever is claimed for, whatever is recovered has to be paid to the employee.

Then if we look to the next slide, again, let us just summarize What can

you claim? We can include regular wages, non-discretionary overtime,

non-discretionary fees, non-discretionary commission payments and piece rate

payments. There is another box there in things not

to include which are; the discretionary payments, the one-off payments, bonuses,

commission payments which are entirely discretionary and benefits in kind.

They are not within the scheme and they are not going to be within this

scheme, so the employer needs to make an election in relation to all of those.

Fundamentally, there is some confusion about what goes

in and what does not go in. I think, again, we will see this in relation to

annual leave. The guidance is probably clearest whenever you assume that the

calculation you put into that claim should be, broadly speaking, aligned to

the nature of the claim or the nature of the calculation you would run

for an employee who is going on annual leave. Whatever you would normally pay

them for annual leave should also fall into the claim which being put through

to the HMRC government gateway. To summarize again, we have put a link in

there which is the JRS calculator. Now, as much as the Government Gateways

Scheme is critically important. Government gateway is just their new

title for the portal so when I use portal, I mean gateway and when I mean

gateway, I mean portal as well. Those terms are interchangeable but for as

much as the portal/gateway is important the JRS, the Job Retention

Scheme calculator is also critically important. There are issues with that JRS

calculator. It is a fairly blunt tool but nevertheless it

is the calculator which the furloughing scheme, the JRS scheme, anticipates that

employers will use. If there are any difficulties with that calculator, those

are to be drawn out directly with the HMRC as opposed to the employer

bashing through its own figures and hoping for the best. It will be

worthwhile spending some time within the JRS calculator first, working with your

figures to get those satisfied before you go into the government gateway.

One of the other issues with the gateway is that once you start the

application process you, at this stage certainly, have three days to

conclude that application otherwise it effectively times out and you start

again. Especially at the start, it opened at 5:30 yesterday morning and a

number of employers were complaining that the system was crashing. Others found

the system worked perfectly well all the way through but certainly it is like

everything, whenever you get the confirmation that your application has

been lodged whether or not successful or not, make sure you keep a full record

of that as we run through so that we can track this back in due course. Some

things still need a bit of clarity, care needs to be taken in relation to

holiday pay, maternity, sick pay, pensions and salary sacrifice. Holiday

pay in particular is one of those that the government latterly gave some

clarity on or some guidance rather. It has not been particularly useful. It

appears in the employee guidance. It does not yet appear in the employer

guidance. Distilling it down where we get to is this holiday pay, again,

should be calculated by reference to the various rates of pay which the employee

would get in a normalized market without furloughing.

We do not worry about 80% off that at all, we just calculate what we would. The

employee should receive 100% of their normal pay so if they have elected

to take some annual leave within a furlough period,

for the days that they are on annual leave

they should be paid 100% even if the employer is only going to be

able to recoup 80% of that through the HMRC portal. There

will still be a small cost which the employer will bear for employees who are

furloughed and who take annual leave. Maternity pay for example, if an employee

is currently on maternity pay and their period of maternity pay

runs entirely through the furloughing period, they do not change

status. They stay categorized as on maternity leave. They receive maternity

pay, contractual, statutory, whatever that may look like and they run through that

period. It only becomes relevant if for example someone on maternity finishes

the maternity pay because their MAT B1 form would have confirmed that as

of, for the sake of argument, 20th of April they would have returned to

work, so they ceased to be in maternity come the 21st of April then if the

employer is furloughing they can go into the furlough scheme for the next period

but, and we will see this later, the employer still has to write to that

individual and must get their consent to change their status from normal employee

returning to work to furloughed employee. That is another piece to

this which is clear from the latest government guidance, is that an employee

consent is now extremely important. That creates a real difficulty for employers,

especially those in the hospitality services industry whenever they were

effectively told to shut down overnight and most employees

immediately dispersed, so we did not get express written consent in the

normalized sense and many people would have said well look, let us get the best

we can in terms of implied consent plus emails.

Well actually, the guidance now is saying the employer must do everything they

possibly can to get express written consent. Whether that is retrospective or

not, or whether that will work or not is up to HMRC to assess but of course

the HMRC are also telling us that you have to keep these records for five

years. They will retrospectively investigate, so it is incumbent on the

employer to do everything they possibly can to manage that. Employees who have

variable rates of pay, that was something we talked about before and

that is fairly settled now, it is there on the slide. Where an employee's wages are

variable the employer can use one of two methodologies. One, use the appropriate

reference period from the previous calendar year if that works or they can

use the average monthly earnings in the entirety of the 2019/2020 tax year.

The employer has an option to do by reference to last year's figures and if

there was for example a seasonal spike in March or April which was unusual and

is not going to be replicated this year by definition, but given what the nature

of the the market we are currently in, then you can go back and use a monthly

average for the whole of the last year via the P60 and that information and that

is permitted. If that is the 'what you can claim' then we have to look briefly at

'how to claim' and this is that the big piece. We now know that the

government gateway way with the portal opened yesterday, the link to it is there.

I am sure you are all very aware of that and you are probably in the process of making

applications. Some key information will be required and it is good to collate this

information before you get into the weeds of doing the actual process. PAYE

scheme reference number and the UTR, the unique taxpayer reference and

company registration, you will need to confirm UK bank account details on that.

Some employers were concerned that if they were outside the jurisdiction or

headquartered outside the jurisdiction would they somehow be debarred?

The answer to that is no. As long as you are known to the PAYE system and

HMRC, and as long as you have a UK bank account through which the the funds are normally

paid then it will be fine. Then we need to go into the total number of employees

being furloughed, the dates the employees have been

furloughed to and from. Now, some employers will say, What happens if

I have furloughed in batches and we have two or three time periods? What we

would say at this point is go in effectively from 1st of March. If anyone

has been or has sought to retrospectively furlough employees to

the 1st of March, probably very few. Certainly the majority have gone in, in

and around Easter, in and around the 6th of April was the big surge in

people going into furlough. In that regard, do the month of April if you like.

For those who furloughed later in April obviously there is going

to be a very low return at this point but it will normalize in May and June

going forward. What you do not do is, try to put in a number of different

periods in your furlough application because the system is not

sophisticated enough yet to accept that. Just go in, for the sake of argument, for

the whole month of April and talk about the total number of employees furloughed

within that period and then when you do the individual employees applications within

that, that is when you differentiate. The name and National Insurance number for each

furloughed employee is important. You can see now why I said HMRC are putting

in their own checks and balances because they are concerned about what they term

'ghost employees' or 'ghost applications' whenever some employers will seek to be

opportunistic with this scheme. As a consequence, while the government did

move the entry date, the PAYE date from 28th of Feb to the 19th of March,

they are not going to move beyond that. It seems that is a very binary

distinction now. You are either in the scheme or you are not in the scheme by

reference to the 19th of March date and the RTI information you have previously

supplied. I know there are a couple of questions

in and we will deal with those later but certainly you have got to have all

this information collated and ready to go when you begin to to make the

application. If you are claiming on behalf of more

than 100 employees, you will need to provide the claim amount and period per

employee. Again, this is going to be a degree of suck it in see when you go

through the application process. There will be teething problems, they will need

to be ironed out. April will be a time for probably only the most

straightforward payments. May is when you will see some of the more sophisticated

or complex issues being addressed and recouped. As employers, we need to make

sure that our own finances are still in place and our cash reserves are

sufficient to make up any shortfall in payroll, whilst we wait for

recoupment at the end of May for this in principle. Reimbursements in

principle will be processed within 6 working days. We expect to see some

payments made by the end of April which will be really helpful for most of us.

I have put it in red at the bottom, the declaration, this is critically important.

We are now seeing some of the teeth, the HMRC are putting into this and

they are saying that, at the end of the process the employer must make a

declaration and that declaration is that the claim is true etc. Also that

it is in accordance with the HMRC published guidance. Why that is so

important is a lot of employers are falling into the trap of seeing the

furlough scheme, the government gateway with JRS with blinkers on and not

remembering that one of the things which the Chancellor said

which is that, this scheme is there to assist employers who are very

significantly impacted by coronavirus. It is not really to be used for any

other purposes. Moreover, normal principles of employment law have not

fallen away i.e. everything we would normally do in relation to selection,

everything we would normally do in relation to openness, integrity, business

accounts etc. are all in play. There will be employer obligations in this and the

employer must abide by those throughout. If

we have to retain these papers for five years and if HMRC were given

themselves the ability to come back and check, we have got to be sure that we can

stand over every decision we make on this. Ultimately, it is the

employer who is taking the risk that we will pay out 80% in payroll, up to £2,500.

If we choose to pay more than that, we do. The employee does not take any

risk. They are either eligible and they get the money or they are not eligible

and they do not get their money. What I am saying is they

do not get their money from the employer anymore because the employer has already

paid out for March, for April and probably will do for May. If the

employer has not followed the rules properly, the employer will take the hit

because they have paid out whenever they are in breach of the rules or they

have misapplied the rules through no malice at all.If the employer has

already paid out, are you really going to recoup that from your employees in a

difficult time? That is going to be exceptionally difficult, and because of

that, this is also a new slide we need to consider, the whole business eligibility

piece. Some people are asking questions about this. Those

questions broadly carry over from the Irish scheme. This is not a means-tested

scheme. The guidance states and I've said it out there, if you cannot maintain your

current workforce because your operations have been severely affected

by Coronavirus you can furlough employees. Keywords there, 'severely affected' and

'can.' You do not have to furlough anyone. You are not obliged to furlough anyone,

but you can choose to furlough if your business has been severely affected.

People have said does that mean a 25% downturn in turnover or profitability, no.

That again is the Irish scheme. Most employers have been severely affected by

Coronavirus and the impact that it has had. Most employers can furlough. It is not

so tight as where otherwise considering redundancies now, it has been loosened to

a degree. This remains a very generous and very positive scheme.

Guidance also goes on to say however, all employers are eligible to claim

under the scheme and the government recognizes different businesses will

face different impacts from Coronavirus. Some of us will still be able to

produce widgets or would have but our stock levels are falling because our

suppliers can no longer give us the constituent parts we need to put

into whatever our product is. Hence, we will be impacted in different ways.

There are a number of elements within that but fundamentally this remains a

very positive scheme. Eligibility generally, if we move on to what is

slide 11 now, apologies. Businesses must have started a PAYE payroll scheme on or

before the 19th of March and have a UK bank account.

We know that. Claims can only be made for those employed by via PAYE.

Initially, it only covered full-time and part-time employees, then it

was extended to cover agency workers, zero-hour contract workers and casual workers. It is

very, very broad. Does it cover the consultants, the Limb B workers? Yes

it can but only if those workers have been on the PAYE system on or by the 19th

of March 2020. For a consultant, who is truly an independent consultant who may well

provide services to a business but has not been paid through the PAYE system then

no, they are not in this. They have to recover through the self-employed

assessment process instead. An employer should not fall into the trap

of doing the humane thing and trying to put employees in or trying to put

consultants in whenever we fall outside these rules, because if you do and HMRC

does not pay out or does pay but subsequently seeks to recoup in the next

five years, then it is the employer that is taking the financial hit in making

these payments. Actually, in the case of consultants or self-employed

individuals, may have misdirected those individuals, by seeking

to do what seems to be the right thing and seeking to make a claim on their

behalf. Actually it just impacts employer payroll and involves an

investigation in the next few years and actually you have misdirected some of the

individuals from some of the right kind of resources that they can unlock.

The last point in that slide that I want to draw your attention to, and I have put

it in red, the employee must have been notified to HMRC through RTI submission

on or before 19th March. Now, if an employee has started with us

prior to the 19th of March but they are not in there on RTI, they will not get

into the furlough scheme. That is black and white. That is what the scheme

currently says. That may seem harsh but it is the reality and actually the

employer needs to ask itself why an employee was recruited post 28th of February

and have not already been updated or put into the system on RTI. The fact that the business

may have been working from home and most of its employees were out as a

consequence of Coronavirus, is probably not a good enough answer because there has

been so much media attention on this. Again, that may well be a grey area for

employees who have started work with an employer in good faith. The employer has

not updated RTI on or before the 19th of March, therefore they cannot be

furloughed. Normal principles of employment law do not fall away, there is

an employer obligation and potential liability which needs to be worked

through. Everything will depend on what you have said and done with that member

of staff, what the contract says etc.

i.e. normal principles of employment law have not fallen away so you need to

answer that in the round of all the comms. Last slide on eligibility then is just

dealing with the employees hired after the 19th of March. That date

was originally the 28th of February, It has been moved by the government to the 19th

of March. Anybody after that, brought in, cannot be furloughed. Where does that

leave them? It leaves them back in the unusual position that they may be seeking to

go back to the previous employer, asked to be rehired, and

then furloughed. That does not work for a whole lot of reasons,

so it may only apply in a very, very small number of circumstances. Query: why would

an employer rehire someone? They have left on bad terms, they may have

left under a compromise agreement, so may have received all the monies, and in

the event they may have been made redundant on a statutory basis, so do

you seek to recoup a statutory redundancy or an ex-gratia payment just

to rehire someone? If you rehire someone for the purposes of furloughing, a couple

of real problems with that. What do you do with continuity of service? What do you

you do if you as a business are not otherwise furloughing anyone. So you are

making a furlough application for one or two individuals who are no longer your

employee in any event, you no longer owe them a duty of care. The government

scheme can allow you to rehire but it is fraught, I think is probably the easiest

way to do it, with difficulty and even if you drafted up some form of employee

consent and some determination in the fact that, I know that I am only in this scheme

for as long as the business wishes to furlough or for as long as the

government keeps the furlough scheme open. Then whenever the furlough

closes, my employment terminates again. Well, that is fine now. Employees will

sign up to anything now to get into the furlough scheme if they are in this

category. What happens in two or three months time whenever the scheme

finishes and the role that they maybe wanted to go to no longer exists because

that business does not have the funds or the finances to bring in a new

employee. This person is now out of work. Do they then come

back to you and say, 'well look, I know what I signed three months ago but

actually I do not have a job to go to and I have been rehired on continuity of

service so I would actually quite like to stay now.' We will say, 'well hang on a

minute, you signed an agreement that said you were going to go', 'yeah but that was

heat of the moment and normal principles from employment law do not fall away,

normal principles of contract law will not fall away and consequently an employer that

rehires someone notwithstanding what may be written, may find themselves in some

real difficulty at the end of this if employee does not have another job to go

to. A real cautious one, keep an eye on

that. Just be advised that there are an awful lot of risk

with the rehiring piece. Another critically important piece to furlough.

When on furlough an employee cannot undertake work for/on behalf of the

organization, the original employer. We are hearing stories of some employers that

are telling employees, 'yes I will furlough you' but rest assured you are

still going to be working. I am going to still expect you to do certain things

working from home or even coming on to site. That is going to be, well let us

be clear with that, that is unlawful. That will be a breach of the furlough scheme

and if anyone does that or requires that to happen, then they are potentially

defrauding the system and the latest guidance on HMRC as produced actually

puts in a whole section on employee whistle-blowing for fraudulent use and

abuse of the the furloughing scheme or member of the public. So, a third-party

knowing this can flag to HMRC that this is an abuse of the system. There are

very small categories of work that can be carried out and performed. Watch the

government guidance. Most of that is in relation to study leave, some of it is in

relation to the very, very basics in terms of passing on information that has

came in, emails, etc. if you are furloughed, so that those who are retained can keep

the business ticking over. Query on directors duties, some of those are vague

because they are basically seven statutory director duties that must be

complied with, even if a director is furloughed and they can be. How do they

comply with their statutory duties? There is more guidance on directors

coming out. Basically the advice must be for all employers be very, very

cautious about what you do or what you ask any employee/director to do

whilst on furlough leave because it may jeopardize the ability to continue to

benefit from this scheme. Minimum length of time an employee can

be furloughed was three weeks. A lot of questions are focusing on this

three-week piece. Do we have to furlough in three week cycles only? No, you can

furlough effectively until the scheme ends, which may be 2 months,

3 months, 4 months but it has to be no less than 3 weeks.

That also permits furloughing an employee for 3 weeks if business picks

up. After a 3 week period bring them back in to do 2, 3, 4 days work

and then you can furlough again. Each period of furlough must be for no less

than three weeks. If it is less than three weeks, that is a commercial call by the

business because the employee will no longer be eligible for furlough within

the government scheme.So, you lose the ability to recover any monies from the

government as a consequence. That is the purpose of the three-week cycle.