Here to Help: Payroll experts answer your hot questions regarding COVID-19

We recently hosted our Virtual Payroll Conference that brought together payroll experts from IRIS and the Chartered Institute of Payroll Professionals (CIPP).

The conference brought together the latest thinking and expertise, featuring a live Q&A at the end where our experts answered your hot questions regarding COVID-19.

During the COVID-19 pandemic do we have to pay our wages as normal?

Samantha Mann, Policy & Research Technical Lead, CIPP: Yes and no, the Job Retention scheme for furloughed workers has been put in place to reimburse 80% of the regular wage of employees, to a maximum of £2,500 per month.

The payments processed for employees should be subject to the same deductions as a normal salary payment, such as PAYE, employee NI and employee pension contributions.

The scheme will also cover the associated Employer National Insurance (NI) contributions and minimum automatic enrolment employer pension contributions due on that subsidised amount. 

Will the Job Retention scheme change existing payroll processes?

Matt Routledge, Product Manager, IRIS Software Group: The Job Retention scheme for furloughed workers is not related to RTI and should not change existing processes.

My staff work varied weekly hours and payroll is processed weekly, how do we process our pay for HMRC to claim the 80% reimbursement?

Matt Routledge, Product Manager, IRIS Software Group: Paying furloughed workers the 80% and claiming the value back through the Job Retention Scheme are two separate processes. 

Pay your staff as normal at 80% via your payroll, allowing for all required deductions and then claim the amount back via the portal which has not yet been released.

As for how much you should pay employees with a variable pay, for those with a full 12 months employment before the claim, employers should use the higher of either the same month’s earnings from the previous year or the average monthly earnings from the tax year 2019-20.  

For an employee who has less than a year’s service, employers can claim for the average of their monthly earnings since they started work.

For employees who only commenced employment in February 2020, use a pro-rata for their earnings so far. 

We may be furloughing staff soon, do I only input 20% of the gross?

Samantha Mann, Policy & Research Technical Lead, CIPP: Employers can supplement the 80% payment to furloughed workers should they wish, but it is not required.

As an employer with only two employees on our payroll, we pay ourselves a basic salary and draw down a business dividend, will the 80% wage relief from the government only be against our basic wage?

Samantha Mann, Policy & Research Technical Lead, CIPP: Nothing has been introduced to cover dividends as they are not recognised as employment remuneration.

If the minimum salary was on your PAYE submission on 28^th February, this will be the basic pay amount covered, but the furlough rules require employees to do no work. 

If the director is normally paid an annual ‘minimum’ amount in March they would have no pay from February to base the amount on. 

For further guidance, it may be worth contacting ACAS. 

We have weekend workers only working 5 hours per week. If they’re asked to stay at home, do we pay SSP?

Matt Routledge, Product Manager, IRIS Software Group: HMRC says, “Those who follow advice to stay at home and who cannot work as a result will be eligible for statutory sick pay (SSP), even if they are not themselves sick.” 

However, whilst changes are being introduced to accommodate emergency measures, the basic rules of SSP have not changed.

So, anyone not eligible to receive sick pay, including those earning less than an average of £118 per week (LEL), some of those working in the gig economy, or self-employed, can claim Universal Credit and or contributory Employment and Support Allowance. 

Here to help

We’re currently working closely with HRMC to process all the changes and ensure that our customers are compliant and correct.

For more information on keeping your payroll running during COVID-19, check out our support hub here.

Also, to find out how much you can claim from HMRC to cover wages for UK employees furloughed via the government scheme, check out HMRC's Furlough Calculator here.