Podcast Summary
Government initiative to retain jobs during pandemic: Govt's 80% furlough scheme helps retain jobs, open to all businesses, eligibility based on Feb 2020 payroll, more info coming soon
The 80% furlough scheme is a government initiative designed to help retain jobs during the economic downturn caused by the pandemic. Employers who had staff on payroll as of February 28, 2020, are eligible to apply for this scheme. The scheme is separate from previous layoff or shortage of work schemes. Employees on any type of contract can be furloughed. The HMRC online portal is not yet available, but more information is becoming clear. The scheme is intended for businesses of all sizes, and it's important for employers to act quickly to understand and implement the scheme for their employees. The situation is evolving, and it's expected that more details will be released soon. Employers should consult their solicitors and HR companies for the most up-to-date information. The goal is to retain jobs and support businesses during this challenging time.
Maternity pay during pandemic calculated as 80% of monthly earnings up to £2,500: During the pandemic, employees can receive up to £2,500/month in maternity pay, calculated as 80% of their earnings. Employers cover NI and auto enrolment contributions.
Maternity pay for employees during the pandemic is calculated as 80% of their monthly earnings, up to a maximum of £2,500. Employees can claim for a minimum of 3 weeks and up to 3 months, with the possibility of extension. Employers can claim based on the employee's earnings in the same month last year or an average of their monthly earnings from the last year. If employed for less than a year, employers will claim for an average of the employee's monthly earnings since they started work. Employers are responsible for paying employer NI contributions and auto enrolment contributions on qualifying earnings. Bonuses, commissions, and fees are not included as part of monthly earnings. Employees can still choose to pay more than the grant, but they do not have to. Employees will still pay income tax and national insurance contributions on their wages. The calculations for 0 hour and part-time employees are based on their earnings in the same month last year or an average of their monthly earnings from the last year. Employers are not required to pay the national minimum or living wage when paying employees on furlough, unless they are doing training or similar activities.
Furloughed employees can train or volunteer, but cannot generate income for employer: Employers can place employees on furlough with notice, but they must pay wages or minimum wage for training. Employees can receive statutory pay during self-isolation, maternity leave, and may be eligible for 80% wages while on furlough. Redundancies can still be made, but employers must follow procedures.
During the furlough period, employers cannot require employees to work but can allow them to undertake training or volunteer, as long as they are not generating income for the employer. Employees must be notified before being placed on furlough and cannot be forced to accept it unless it complies with normal redundancy rules. If employees are in self-isolation, they can first receive Statutory Sick Pay (SSP) and then be furloughed. Employers must pay the National Living Wage or National Minimum Wage for any training periods. Employees on maternity leave can receive Statutory Maternity Pay (SMP) and, depending on the terms of their contract, may be eligible for 80% of their normal maternity pay while on furlough. Employers can still make redundancies, but must follow normal HR procedures. Landlords continuing to demand rent despite business closures is a significant challenge for businesses facing increased costs and debts.
Follow standard process for claiming SMP and furlough grants: Employees should claim SMP every 3 weeks with required info, while employers should record furlough grants as income then expenses to not affect profitability
Pregnant employees who are starting maternity leave and planning to claim Statutory Maternity Pay (SMP) should follow the standard process and make at least one claim every 3 weeks. The claim requires a PAYE reference number, number of employees being furloughed, the claim period, the amount claimed, bank details, and contact details. It's unclear if the money will be paid first or if employers need to pay out before claiming. Employers should consult their accountants for tax implications, and there are concerns about potential fraud. The grant money received should be recorded as income and then netted out as an expense, effectively having no impact on profitability. Furlough payments are not treated as income. The 10k grants from the government do not affect turnover. Employers should treat the grants as income and then cancel it out as expenses, reporting it in their accounts to show where the money came from.
Flexibility in Furlough with Tax Implications: Employers can put employees on/off furlough for business needs, but furlough pay is taxable, reducing take-home pay. Apprentices can train while on furlough, but details are unclear. Stay informed for policy updates.
Employers have the flexibility to put their employees on and off furlough as needed. This allows for fair treatment of staff while managing business operations. However, furlough payments are subject to tax and National Insurance, reducing the take-home pay for employees. There is ongoing discussion about support for business owners who primarily take salaries through dividends rather than wages. Additionally, apprentices can continue their training while on furlough, but there is some confusion regarding the specifics of this situation. Employers should keep in mind that the government is continually adjusting policies, so it's essential to stay informed and patient for updates.
Government's Furlough Scheme: Details for Businesses and Self-Employed: Businesses need 3 weeks notice for furlough, self-employed get 80% of profits back (averaged), those earning over £50,000 likely get nothing, reach out to Universal Credit or MP for help, first gov't payments not announced, banks may offer temporary overdrafts, stay informed and act quickly
The furlough situation for businesses requires a minimum of 3 weeks notice, and self-employed individuals with profits under £50,000 will receive 80% of their profits back, averaged over the last 3 tax returns. However, those who have earned more than £50,000 in the past will likely receive no financial assistance at this time. The specifics of this situation for individuals with varying income histories is currently unclear. If you're a business owner or self-employed individual struggling financially, consider reaching out to Universal Credit or contacting your MP for advocacy. The first payments from the government for these furlough payments have not been announced yet, but it's expected that banks will honor the government's guarantee and provide temporary overdrafts to cover the costs. With many businesses facing financial strain and potentially lacking the necessary cash reserves, it's crucial to stay informed and take action as soon as possible.
Navigating Business Challenges During the Pandemic: Entrepreneurs must stay informed, persistent, and optimistic as they navigate government loans, staffing decisions, and new opportunities during the economic downturn caused by the pandemic.
Entrepreneurs and business owners are facing unique challenges during the economic downturn caused by the coronavirus pandemic. Some are struggling to access government loans and are concerned about their PAYE history not being recognized in their self-employment status. Others have had to let go of staff and are looking for ways to rebuild their businesses. However, there is a silver lining as many are using this time to plan for the future and explore new opportunities. Some have even managed to secure significant loans from their banks. It's important for business owners to communicate with their MPs about their concerns and to keep a positive attitude as we navigate through these uncertain times. Additionally, there is a debate among business owners about the best way to pay themselves, with some opting for salary plus dividends and others sticking to PAYE. Overall, the key takeaway is that entrepreneurs need to stay informed, be persistent, and remain optimistic as they work to weather the economic storm caused by the pandemic.
Calculating furlough payments for employees working beyond contracted hours: If an employee works more than their contracted hours for over three months, their new average should be considered for furlough payments. Uncertainty remains regarding payment calculations for days worked before furlough, and separate payrolls might be necessary.
During the furlough process, employers are facing uncertainty regarding payment calculations for employees who work beyond their contracted hours. While contracted hours serve as primary evidence for calculating furlough payments, if an employee consistently works more than their contracted hours for over three months, their new average should be considered. Ian Parkinson's question about handling three days of pay before furlough remains unanswered, and it's suggested that running separate payrolls might be necessary. Business owners are struggling to plan due to the uncertainty surrounding the end of the pandemic and its impact on their industries. Instead of waiting for a return to normal, they are encouraged to pivot and explore new ways to generate income, such as selling products online or starting a retail business.
Navigating uncertain times: Stay motivated, adapt, and prepare: Stay informed, recharge, adapt, and prepare for a slower economic recovery. Use this time to pivot, find new income streams, and protect healthcare systems.
Even during challenging times, it's essential to stay motivated, keep planning, and adapt to change. The economic recovery from the current crisis might not be a swift "V" shape but more likely a "U" shape, with a slow return to normalcy. Many businesses and individuals are facing financial difficulties and need to pivot or find new ways to generate income. The speaker, for instance, has relaunched his online training program and is writing a book. It's crucial to use this time to recharge, relax, and prepare for the eventual relaunch. The speaker encourages everyone to stay informed, stay safe, and protect the healthcare system. Listen to the James Sinclair Business Broadcast for more insights and advice on navigating these uncertain times. The podcast is available on various platforms, including iTunes and soon on Spotify. Remember, we're all in this together, and we'll get through it.
Learning new skills during lockdown: Use lockdown time to learn new business skills through programs like Entrepreneurs University, conserve cash, and prioritize staff payments.
The current situation is unprecedented and affecting various aspects of life beyond business. A personal example was given about expecting a baby and the difficulty of having family and friends meet the newborn due to social distancing measures. Businesses, including the speaker's own, are having to conserve cash and prioritize paying staff. Amidst these challenges, the speaker encourages individuals to use their time at home to learn new skills and take advantage of free resources like Entrepreneurs University. The program offers modules on marketing, getting customers, increasing profits, and identifying businesses to buy, all of which can help prepare for the eventual return to business growth. The Entrepreneurs Network membership includes access to a community, digital magazine, video training, live webinars, a Facebook group, and welcome calls, as well as the opportunity to speak with a coach or mentor for guidance. The speaker emphasizes the importance of using this time to learn and grow, as the business world will eventually recover.
