08 Jun Update: Coronavirus Job Retention Scheme
Coronavirus Job Retention Scheme (CJRS) Latest guidance announced by HM Government 29 May 2020. Revised CJRS from 1 July 2020.The government have announced three changes to the job retention scheme:
1. From 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back to work part time and still receive a grant for the time when they are not working.
2. From 1 August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.
3. The scheme will close to new entrants from 30 June 2020. Critically, employers will only be able to claim going forward if they have previously claimed under the pre-1 July 2020 scheme. Note: there is a three-week minimum furlough requirement under the current rules, therefore any new period of furlough leave must have started by 10 June 2020, to be complete when the current scheme ends on 30 June 2020.
Outlined below are more details on each of the three changes:
1. Part time furloughing
From 1 July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work. Employers will decide the hours and shift patterns their employees will work on their return and will be responsible for paying their wages in full while working.
This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for. Any working hours arrangement agreed between a business and their employee must cover a minimum period of at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.
2. Employer contributions
From 1 August 2020, the government grant provided through the job retention scheme will be slowly tapered.
• in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and basic pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work.
• in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay all ER NICs and pension contributions.
• in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay all ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500.
• in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay all ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500.
• the cap on the furlough grant will be proportional to the hours not worked.
Some employers may have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted by that part of the tapering of the government contribution.
Where employees are on part time furlough, the furlough grant will be reduced and be proportional to the hours worked.
For those clients who intend to bring their employees back on a part time basis, this will require detailed records of hours worked/not worked on a daily basis.
Our current understanding is that there will be a new maximum limit of staff who can be included in a claim. This will be based on the maximum number of staff ever included in a single claim prior to 30 June 2020.
3. Important dates
It is important to note that the scheme will close to new entrants from 30 June 2020. From this point onwards, employers will only be able to claim under the furlough scheme if they have previously made a claim for furlough prior to 30 June 2020. From 1 July 2020 employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June 2020. This means that the final date by which an employer can furlough an employee for the first time will be 10 June 2020 for the current three-week furlough period to be completed by 30 June 2020. Employers will have until 31 July 2020 to make any claims in respect of the period to 30 June 2020.
Guidance and support
The detailed guidance on how to calculate claims with this extra flexibility is expected to be available by 12 June 2020 and we will continue to keep you updated on scheme developments and/or changes to the above guidance as soon as they are published.
More information can be found online at GOV.UK by searching ‘Coronavirus Job Retention Scheme’.
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