Waiting to get paid is hell
Government help should enable your employer to cover most of your wage
IAM PAYE and have been with same company for the last 24 years. On March 24, our construction site was closed down indefinitely. The following day, I received an email from my employer stating that the Government hadn’t yet explained how the money they are going to give businesses to pay their employees is going to be distributed. I think they are paying 80 per cent of our salaries. Is that right? Also, in your opinion, when do you think this 80 per cent of wages will be paid? Nobody seems to know. Rob McShane
YOU’RE not the only one to ask a question like this over the last few days, so I’ll be as general as I can be when answering so that my advice will benefit as many readers as possible. Let’s look at the details of the scheme first. As I’m sure you’re aware, the Government has been looking very closely at the best way to get money into the hands of the people that need it the most as quickly as possible. It has designed two schemes, one for employees and one for the selfemployed. I’ll look at the scheme for employees this week and come back and look at the help available for the self-employed next week.
The scheme for employees is called the Job Retention Scheme, and the idea is that the Government will give employers money to allow them to pay their staff 80 per cent of their salary up to a maximum of £2500 per month.
In order to qualify for this payment, employees have to have been on their employer’s payroll on February 28 this year. Full-time and part-time employees are eligible, as well as employees on agency contracts and those on flexible or zero hours contracts.
The scheme is designed to help employers that are losing business as a result of the coronavirus pandemic and the idea is that employees who benefit from this scheme will be placed on “furlough”, and this means that they won’t be able to do any work while they are being paid via their employer by the Government.
My understanding is that employers will be able to claim from the Government for the 80 per cent of salary as well as the employer’s national insurance contributions related to that payment and the employer’s auto enrolment pension contributions.
It is up to the employer whether
they make up the employee’s pay to 100 per cent. If they do so it will be at their own expense, and they will also be responsible for the NI and auto-enrolment portion of the top-up.
If they choose not to do this, then the employee’s pay will be limited to 80 per cent of previous salary up to a maximum of £2500 per month.
The payments you receive as an employee will be subject to tax and national insurance contributions as usual and you will continue to pay auto-enrolment contributions if you are a member of a pension scheme. The scheme will initially last for three months and will be renewed as necessary.
The difficult bit of your question is when you ask about timescales because the Government has been a bit vague about exactly when the money will be available to companies to pass on to their staff.
My understanding at the moment, and this could well have changed between the time of writing and the time of reading, is that companies will have money in their hands to pass on to employees in May, with payments backdated to March.
What does that mean for companies who don’t have enough cash to bankroll these payments initially, and what do employees do while they wait?
I think that many companies will be eligible for some sort of business loan that they will be able to apply for from their bank, and this should allow them to make payments to employees while they are waiting on money being paid to them by the Government.
These loans should be interest free for the first 12 months.
For individuals, it might be a case of careful budgeting and deciding which bills to pay until money comes through.