***Updated Blog following government updates from 17th April***A brief guide to the Coronavirus Job Retention Scheme, what it means for the events industry and event staff, and who is eligible for furlough.
Adapt to Survive
He may be the most misquoted man in history but what Darwin has to say about survival is extremely relevant in today's corona-economy.
"It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change" Charles Darwin 1809
As we learn to adapt through these times, the government are providing certain measures to ease the pressure on businesses and their owners. There are various grants and loans available, although highly nuanced, we do suggest speaking to your accountant or finance team for advice.
Furlough for the UK Events Industry
On Friday 20 March, the Chancellor Rishi Sunak announced the new Coronavirus Job Retention Scheme. The aim of the scheme is to enable UK employers to access a grant to continue paying part of the salary of employees who would otherwise have been made redundant or unemployed as a result of the coronavirus crisis. This scheme does not apply to the self-employed who are being helped under a different scheme.
On Thursday 26 March, the government a published detailed guidance for employers on how the scheme will operate. Here are the basics:
What is the Coronavirus Job Retention Scheme (JRS)?
The new JRS is a series of grants from HMRC to cover 80 per cent of the wages of staff who are on the payroll but not working because of the outbreak. The maximum amount eligible is £2,500 per worker per month. The use of the word “grant” rather than “loan”, means that the money will not need to be repaid.
An employer can choose to top up an employee’s salary, above the 80% / £2,500 cap, but it is not obliged to do so under the JRS.
Employers must ask employees to stop working while keeping them on their payroll. These individuals are described by the scheme as “furloughed workers".
The scheme will be up and running by the end of April 2020. ***Update - the furlough scheme went live on 20th April.
Who can access the scheme?
All UK employers who operate by PAYE can access the scheme. Employers will need to have created and started a PAYE payroll scheme on 28 February 2020. ***Update, the date for furlough eligibility has changed to 19th March 2020. Employees must have been on PAYE payroll on or before this new date.
The scheme is open to ANY size business or sector who pay their employees via PAYE. Your business does NOT need to be considered "essential" in order to access the grants, nor do you need to demonstrate financial hardship.
Which Event Staff can be furloughed?
JRS will support any individual paid through the PAYE system, regardless of their employment contract.
This means workers who are paid through PAYE will be covered, including those on part-time, zero-hour contracts or other flexible contracts. Workers who have more than one job or who work for more than one company will also be included. Each employer and job will be considered separate, so the cap will apply to each employer individually. This will be good news for event crew and flexible workers in the gig economy, although they must have been employed on or before 28 February 2020. Workers can only be considered furloughed if they have stopped working. ***Update, this date has now changed to 19th March 2020. Those who were employed as of 28th February on PAYE payroll but who ceased working for that employer after that but before 19th March 2020 can be reemployed and then furloughed.
Although not specified in the guidance, it is implied that employees can be furloughed in one job, while continuing to work in another. Again, this could benefit event staff, crew and flexible workers.
JRS will also cover employees who were made redundant since 28 February 2020, if they are rehired by their employer. If your business had to make redundancies it is possible to re-employ staff made redundant after 28 February, and place them on furlough in order to benefit from the JRS.
Tax, National Insurance and Pensions
The grant will cover the associated Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions payable on the subsidised wages paid to furloughed employees. Further guidance will be issued on how to calculate this.
Individuals will pay income tax and National Insurance Contributions as usual on any payments received as part of the JRS (via PAYE deductions made by their employer). Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have opted out.
How are 80% of wages being calculated?
For employees who receive a regular salary 80% is calculated based on an employee’s actual salary before tax (ie their gross salary), as of 28 February. ***This date has now changed to 19th march 2020.
Most event staff, crew, hospitality staff, performers etc will be on shorter, flexible contracts. For these types of employees whose pay varies, eg. zero-hour or flexible contracts, the 80% limit will be applied to the higher of:
- the same month’s earnings from the previous year; or
- the average monthly earnings from the 2019-20 tax year; or
- if they have been employed less than a year, an average of their monthly earnings since they started work (or pro-rata earnings if they only started work in February).
Although, in not such good news for flexible workers, the government has stated that furloughed employees can be paid the lower of 80% of salary or £2,500, even if it brings them below the National Minimum Wage.
How long will JRS operate for?
So far the Chancellor has said the temporary scheme which will run for at least three months from 1 March 2020 until the end of May. Although it is said he will extend the scheme for longer if necessary.
How to Furlough Event Staff
The government has confirmed that any decision must be discussed with staff and any changes made “by agreement.”
The guidance also states that “if sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment”.
In order to be eligible for the subsidy, guidance states that employers should write to their employees confirming that they have been furloughed and that they should keep a record of this letter. The potential implication is that without written evidence of such communication, there is a risk that employers may not be able to claim under the JRS.
***Additional information from 20th April 2020. Taken from guidance from Mayer Brown:
- Further guidance has been provided on the information to be provided by employers if they wish to make a claim for the grant. If employers are furloughing fewer than 100 staff they will be asked to enter details of each employee being claimed directly into the system to include details such as name, national insurance number, claim period, claim amount etc. If there are more than 100 staff being furloughed then this is to be provided by a file with the information rather than input directly into the system.
- The Guidance Note requests employers to keep employees fully up-to-date on the claims being made on their behalf. HMRC is not providing employees with details of claims made on their behalf. This is presumably mostly of importance where employers have furloughed people on the basis that they accepted they would only get paid when the furlough grant monies came through from the Government.Otherwise the employer remains on the hook to make the salary payments due during the furlough period irrespective of whether it is in funds for the period in question.
Is there a minimum furlough period?
The government has stated that the minimum length an employee can be furloughed for is three weeks.
Does JRS apply to people on sick leave or self-isolation?
In short, no. Anyone who is off sick, or who is self-isolating in accordance with government guidance, should be paid statutory sick pay, or enhanced sick pay if provided for by their contractual terms. Government guidance is that anyone who lives in the same household as someone with symptoms of coronavirus must remain at home for 14 days. This means that it is not possible to use the JRS to “top up” statutory sick pay, or to claim support when paying enhanced sick pay.
However, once someone is no longer off sick or no longer required to self-isolate, they can be furloughed.
What if your staff are self-employed?
As mentioned above, the self-employed are being covered under a separate scheme. Similar to furlough this scheme will allow self-employed staff to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
You can apply if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
- traded in the tax year 2019-20
- are trading when you apply, or would be except for COVID-19
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to COVID-19
Self-employed trading profits must also be less than £50,000 and more than half of income generated from self-employment.
Most importantly this scheme cannot be applied for yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. They have asked specifically not to be contacted in this regard.
***Updated information for SEISS (Self-employed scheme)
- Those eligible for the scheme will be contacted by HMRC by mid-May 2020.
- The SIS Grant does not need to be repaid at a later date (assuming it was validly applied for) and does not preclude an individual from taking on work or other employment during the period of receipt of the grant.
- It will be necessary to confirm to HMRC that the business has been adversely affected by coronavirus. This is not defined, and there may, of course, be some situations where the individual cannot show a decline in profits, but is able to argue that the profits would have been higher but for the coronavirus pandemic.
- Individuals who have not submitted a self-assessment tax return for 2018-19 must have submitted this by 23 April 2020 or they will simply be completely ineligible for coverage. There is no mention of any leeway in the Guidance Note so this is being presented as a hard stop date.
In a Nutshell
In summary the key points for event staff are:
- Part-time, zero-hour and flexible contract event staff can be furloughed
- Furloughed employees can be paid the lower of 80% of salary or £2,500
- Amount is calculated based on an employee’s actual salary as of 28 February 2020, or
- If on a flexible contract, amount will be based on average monthly earnings from 2019-20 tax year
- Self-employed are not eligible under this scheme
Clear as Mud?
It's a tough time and we are all having to learn new ways of working and getting to grips with these government schemes. Liveforce is no different. The Events Industry has been hit hard, but what this has highlighted is how important and valued the industry is. There will be a new way of working and a new lease of life for all business when this is over. With the passion, strength, intelligence and commitment that abounds the events industries, we will adapt and survive.