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Can employees reduce their pension contributions?

  • Remember that employees will also be making contributions on any reduced wage under the Coronavirus Job Retention Scheme. The amount contributed may be less, but the contribution rate will be the same, unless the following applies.
  • Employees may reduce their DC employee contributions if their scheme rules allow them to do so, but no further than the statutory minimum if the scheme qualifies as the employer’s auto-enrolment vehicle.
  • Employees might choose to opt-out or cease active membership of their scheme, which might cause a spike in administration at a time when administrators are likely to be understaffed. It is important that employers remember they must not do anything to encourage or induce employees from leaving an auto-enrolment vehicle as this may constitute an offence.
  • Employees who leave their scheme in this way will have to be re-enrolled in due course as and when required by law.
  • For DB schemes, specific considerations apply (see the last section, below).

Related FAQs

Should Covid-19 be recorded as a cause of death?

The Chief Coroner supports the position, communicated by NHS England and the Chief Medical Officer that Covid-19 is an acceptable direct or underlying cause of death for the purposes of completing the Medical Certificate of Cause of Death (MCCD) and is considered a naturally occurring disease. This cause of death alone is not a reason to refer a death to a coroner under CJA 2009.

If the cause of death is believed to be due to confirmed Covid-19 infection, there is unlikely to be any need for a post mortem to be conducted and the MCCD should be issued, and guidance is given on how this is delivered to the Registrar in the event of the next of kin/informant being in self-isolation. 

In a hospital setting the MCCD process should be straightforward because of diagnosis and treatment in life. This may be more complex in a community setting. The Coronavirus Act 2020 however expanded the window for last medical review from 14 to 28 days. Outside of this, the death will need to be reported to the coroner.

Although Covid-19 is a naturally occurring disease, there may be additional factors around the death which mean it should be reported to the coroner; for example, the cause of death is unclear, or where there are other relevant factors. Guidance is given to coroners on how to manage such reported deaths, particularly where post mortem examinations may not be readily availability.

Which charities will benefit from this funding and when – Key Services?

The Government will allocate £360 million to charities providing key services and supporting vulnerable people during the crisis.  £200 million of this amount will be paid to Hospices UK to be distributed to hospices to help increase capacity and give stability to the sector.  The remaining amount is to be allocated to:

  • St Johns Ambulance to support the NHS
  • victims charities, including domestic abuse, to help with potential increase in demand for charities providing these services
  • charities supporting vulnerable children, so they can continue delivering services on behalf of local authorities;
  • disabled people
  • Citizens Advice Bureau to increase the number of staff providing advice during this difficult time

The Government Departments will identify priority recipients, with the aim that these charities will receive money in the form of a cash grant over the next few weeks and by the end of April to assist in paying amongst other costs April’s wage bill.

What are the minimum consultation time limits?

Where an employer is proposing to dismiss:

  • 100 or more employees at one establishment within a 90-day period, consultation must begin at least 45 days before the first dismissal takes effect
  • Between 20 and 99 employees within a 90-day period, consultation must begin at least 30 days before the first dismissal takes effect
  • If you are proposing to dismiss less than 20 employees then there are no minimum time limits but you must adhere to a fair process which will involve individual consultation and providing the employee with a right of an appeal
How do I access the Coronavirus Job Retention Scheme?

The scheme is being administered by HMRC under a new online portal that has been set up. It applies to businesses, charities, recruitment agencies, individuals who employ a nanny, administrators (where there is a reasonable likelihood of re-hiring the workers) and public authorities.

All employers with a UK payroll can apply as long as you have:

  • Created and started a PAYE payroll scheme on or before 28 February 2020
  • Enrolled for PAYE online (which can take up to 10 days)
  • A UK bank account.

To make a claim you will need:

  • The number of employees being furloughed
  • The start and end date of the claim
  • The name and National Insurance Numbers for each furloughed employee
  • Your employer PAYE reference number
  • To be registered for PAYE online
  • The Self-Assessment Unique Taxpayer Reference, Corporation Tax Unique Taxpayer Reference or Company Registration Number as appropriate for your entity
  • Your UK bank account details and sort code
  • Your name and contact number
  • Your organisation’s registered name
  • Your organisation’s billing address
  • The full amounts you are claiming for including:
    • Employee wages
    • Employer national insurance contributions
    • Employer minimum pension contributions

For claims for those who are flexibly furloughed you will also need:

  • the number of usual hours the employee would work during the claim period
  • the hours the employee has worked or will work during this period
  • you will also need to keep a record of the number of furloughed hours that the employee has or will be furloughed for.

You will need the above information ready before you access the system to make a claim. You will also need to have calculated the amounts claimed in advance as the application needs to be completed in one session. You can currently save one draft of the application and it must be completed within 7 days of starting it.

The Government has issued a step-by-step guide for employers who wish to make a claim under the scheme which can be found using the link below. It contains useful information about calculating the payments claimed. You will need to register for a Government Gateway ID and password if you do not yet have one in order to access the portal.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/880099/Coronavirus_Job_Retention_Scheme_step_by_step_guide_for_employers.pdf

If you use an agent who is authorised to act for you for PAYE purposes, they will be able to make a claim on your behalf. If you use a file only agent (who files your RTI return but doesn’t act for you on any other matters) they won’t be authorised to make a claim for you and you will need to make the claim yourself. A file only agent can assist you in obtaining the information required to make a claim (listed above). If an agent makes a claim on your behalf you will need to tell them which bank account you would like the grant to be paid into.

For claims for fewer than 100 employees you will need to input the details separately for each employee. If claiming for more than 100 employees you can upload a file with the information instead. The file should include the following information for each furloughed employee: name, National Insurance number, claim period and claim amount, payroll/employee number (optional). You will also need to include details of hours normally worked, actual hours worked and hours furloughed for those who are flexibly furloughed.

The need to demonstrate the impact of coronavirus on your business is not one of the criteria listed above about who can make a claim, so the government does not appear to intend to set a specific test to determine if a business is “severely impacted by coronavirus”. You are not required to explain the impact of Coronavirus on your business when submitting your claim.

HMRC will retain the right to audit any claim retrospectively. You must keep records for 6 years including:

  • the amount claimed and claim period for each employee
  • the claim reference number
  • you calculations for each claim
  • details of hours usually worked and hours actually worked for flexibly furloughed employees.

You must tell your employees that you have made a claim under the scheme, and you must continue to pay their wages during this time.

Preparing for April 2021 – what do you need to do?
  • Audit
    • Identify your off-payroll contractors
    • Determine the status of off-payroll contractors
      • CEST – HMRC employment status checker for tax purposes
  • Communication – liaise with affected workforce
  • Contracts – get them compliant
  • Consider the Ward Hadaway toolkit