Six key areas employers must focus on to make sure employees are paid during these uncertain times
Today, more than ever, it is crucial that employees are paid, and that they are paid on time. The coronavirus has meant that millions of people are out of work, placed on furlough leave, or working shorter hours than usual. To help these people get through these difficult times, employers and payroll teams must be aware of the schemes and support available to them and the actions they should be taking.
1. Use the coronavirus job retention scheme for furloughed employees
This scheme – which went live on 20 March and will be running until March 2021 – has been set up by the UK government for furloughed workers, helping businesses claim up to £2,500 a month per employee.
Employers can pay workers 80% of their regular wage with the government funding these payments through a grant and the scheme covers all UK employers that had created and started a PAYE payroll scheme on or before 19 March 2020, enrolled for PAYE online and have a UK bank account. This includes businesses, charities, recruitment agencies and public authorities. However, the scheme will close to anyone who hasn’t been furloughed for three weeks by 30 June, so if employers intend to furlough employees, the period of furlough needs to start on or before 10 June – this ensures the minimum three-week period is complete by 30 June.
From July, furloughed staff will be able to work part-time in their old roles and from August, employers must pay National Insurance and pension contributions, then 10% of pay from September, rising to 20% in October.
The scheme ensures furloughed employees are paid and that they do not experience any financial difficulties while not working. According to a 23 April update from the HMRC, 435,000 firms have so far made claims worth £3.75bn and covering 3.2 million employees.
Payroll teams can claim for employees on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts.
On 8 July, chancellor Rishi Sunak announced that businesses will be paid a £1,000 bonus for every furloughed employee they bring back to work.
To be eligible, employees will need to:
- earn at least £520 per month (above the Lower Earnings Limit) on average for November, December and January
- have been furloughed at any point and legitimately claimed for under the Coronavirus Job Retention Scheme
- have been continuously employed up until at least 31 January 2021
2. Calculate parental pay on usual earnings, not the furlough rate
For any employees who have been placed on furlough, but are taking parental or adoption leave on or after 25 April, the government has stated that the parental or adoption leave pay for these employees should be based on their usual earnings, and not the lower rate they are receiving while on furlough.
Employers should make sure this is communicated to employees and let them know that this applies to those taking parental, adoption or parental bereavement leave.
The government has also recently stated that parents on statutory maternity and paternity leave who return to work in the coming months will be eligible for furlough scheme even after 10 June cut-off date. This will only apply where they work for an employer who has previously furloughed employees.
3. Use the coronavirus statutory sick pay rebate scheme for sick employees
If employees have been off sick – on or after 13 March 2020 – due to the coronavirus, the coronavirus statutory sick pay rebate scheme will repay employers the current rate of statutory sick pay that they are paying to current or former employees.
The scheme is not up and running yet but repayments will cover up to two weeks starting from the first day of sickness if an employee was/is unable to work because of the coronavirus, if they cannot work due to self-isolating at home, or if they are shielding in line with public health guidance.
Employers can use this scheme is they are claiming for an employee who’s eligible for sick pay due to coronavirus, if they’ve had a PAYE payroll scheme that was created and started on or before 28 February 2020, and if they had fewer than 250 employees on 28 February 2020.
4. Keep communication open
Communication is key during times of crisis. By letting employees know that they will still be getting paid like normal, you can help reduce stress and anxiety.
If employees are being furloughed, you should tell them how this affects their pay (for example, the amount they will be paid each month), and you should be willing to listen and answer any questions or concerns they may have.
These are difficult times for everyone, and clear communication can ease many doubts and concerns.
5. Consider new ways to help employees with their finances
There are a range of new startups on the market who have developed apps to help employees improve their financial wellness, as well as offer early access to workers’ earnings – removing the need to expensive payday loans.
Wagestream – which integrates with CIPHR’s HR software – allows employees to stream their salary directly into a savings account, and provides access to financial education in order to improve financial wellbeing. This app and others, such as Hastee Pay and fastP.A.Y.E by Shopworks, also help employers to offer their workers early access to earned wages, and give their employees the tools they need to handle their own finances in difficult situations like those being experienced today.
6. Seek assistance from payroll providers
If members of the payroll team are not able to work as a result of the coronavirus and you’re struggling to pay employees as a result, don’t hesitate to seek assistance from your payroll provider.
Payroll Business Solutions offers business continuity services that mean if your payroll manager is unavailable due to sickness, or isn’t able to access your on-site systems, our experts can step in any run your payroll for you. To find out more about how we can help you pay your people during uncertain times call 01628 814242 or email email@example.com
This article was updated on 5 November 2020 to reflect the extension of the furlough scheme.