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Coronavirus (COVID-19) & Paying Employees

Article ID
Article Name
Coronavirus (COVID-19) & Paying Employees
Created Date
31st March 2020
IRIS PAYE-Master, Earnie, IRIS Earnie IQ, IRIS Payroll Business, IRIS Bureau Payroll, IRIS GP Payroll
Measures announced by the government affecting employee’s pay.

On 20 March 2020, the Chancellor announced that the Government is going to cover up to 80% of the current wage level of employees that would otherwise have been laid off during the Coronavirus pandemic, provided they are kept on the employer’s payroll.

We are receiving a lot of support call & emails asking how this will be practically applied in Payroll and the answer is, we do not know yet. We have raised the same questions as yourselves with HMRC and will update with details as soon as we know more. If you need more information than we can provide at this time, we can only advise you contact HMRC directly.

An employee that would otherwise have been laid off during this crisis will be designated as a “furloughed” worker

There will be a ceiling of £2,500 a month on salaries to which this applies.

Employers can still top up salaries above this level if they choose to.

The new Coronavirus Job Retention Scheme will apply to all employers and will be backdated for those who have been unable to work since 1st March 2020.

The Scheme is expected to last for at least 3 months, will likely be extended, and is part of the Government’s measures to protect jobs at the present time.

HMRC will be setting up an online portal on which employers will submit information about the employees that have been furloughed and their earnings and other details which are still to be confirmed. HMRC hopes to be able to make the first grants under the Coronavirus Job Retention Scheme within weeks and they are aiming to have the portal up and running before the end of April.

For information on the Coronavirus Job Retention Scheme and other initiatives to support businesses such as VAT deferral, see covid-19-support-for-businesses.

In the meantime, it is encouraging those who may face short term cash flow problems to consider if they qualify for a Coronavirus Business Interruption Loan.

See coronavirus business Interruption loan scheme

Coronavirus Job retention Scheme

The government has published detailed guidance, for full details click here

Who Can Claim?

Any UK organisation with employees can apply, including:

  • businesses & charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities
Employees you can claim for

Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:

  • full-time & part-time employees
  • employees on agency contracts
  • employees on flexible or zero-hour contracts
Work out what you can claim

At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary.

HMRC will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.

Full time and part time employees

For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses are not be included.

Employees whose pay varies

If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019-20 tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

Employer National Insurance & Pension Contributions

All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.

You can claim a grant from HMRC to cover wages for a furloughed employee, equal to the lower of 80% of an employee’s regular salary or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.

For full details please see the guideance here:

For details on changes to SSP please see:

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