Coronavirus Job Retention scheme

We are gathering information on the Coronavirus Job Retention Scheme and updating this page as it is released from the government. The latest announcements are also covered in our blogs. 

 retain your employees through the Coronavirus Job Retention Scheme (CJRS)

CJRS following updates on 29 May 2020

Rishi Sunak announced that the Coronavirus Job Retention Scheme will be extended until the end of October. In essence, the CJRS remains unchanged until end July. From Aug to Oct, the scheme continues but with greater flexibility. Employers currently using the scheme will be able to bring furloughed employees back part time and the government will ask employers to start sharing with the government, the cost of salaries. This is the  Flexible Furlough concept. Employees will continue to receive the same level of support throughout, i.e. 80% of salary up to a maximum of £2,500 per month. 

Here is what we know so far about the changes to CJRS and Flexible Furloughing. [Source Gov.uk]

Changes to CJRS

  • 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 pension contributions. Employers are not required to pay anything. The scheme continues in its current format
  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed
  • September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed
  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed
  • The CJRS scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June. That means the final date for a first time employee furlough will be the 10 June. Claims in respect of the period to 30 June must be made by 31 July

Flexible Furloughing

  • From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time
  • Individual firms can decide the hours and shift patterns their employees will work on their return and will be responsible for paying their wages while in work
  • Employers can claim the CJRS grant for employees normal hours not worked

We expect further guidance on flexible furloughing and how to calculate claims on 12 June.  Until this is published, the Gov has produced Fact sheets on the changes to CJRS and Self Employment Income Scheme

The information below relates to the current CJRS scheme, introduced in March and in place until end of July.

If you cannot maintain your workforce because of Covid-19 you can furlough employees and apply for a government grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum wage automatic enrolment employer pension contributions on that wage .  Employers will use an online service to claim the grant and the scheme opened for claims on 20 April. HMRC has produced an employers step by step guide to making a claim. If you need our help with this, please do get in touch. 

Who can claim?

  • Any entity with a UK payroll, including businesses, charities, recruitment agencies and public authorities, so long as you have created and started a PAYE payroll scheme on or before 19 March 2020 (updated on 15 April 2020), enrolled for PAYE online and have a UK bank account.

The government guidance makes special reference to :

  • Apprentices – who can be furloughed and continue to train whilst furloughed, but they must be paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage as appropriate for the time they spend training, so you must cover any shortfall between the amount you can claim under CJRS and their appropriate minimum wage
  • Public Funding – where you receive public funding for staff costs, and that funding is continuing, the government expects you to use that money to continue to pay staff in the usual way. You are not expected to furlough them.
  • Individuals – individuals can furlough employees such as nannies, provided they pay them through PAYE and they were on the payroll on or before 19 March 2020
  • Administrators – can access CJRS but only where there is a reasonable likelihood of rehiring workers

Who can you claim for?

  • furloughed employees on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020, including foreign nationals
  • employees on any type of employment contract – full time, part-time,agency, zero-hours ,flexible or fixed term contracts

In addition to those above you may furlough:

  • re-employed employees you made redundant on or after 28 February 2020
  • employees who started unpaid leave after 28 February 2020 
  • employees who return from sick leave and are no longer receiving Statutory Sick Pay
  • “shielded” employees if they are unable to work from home and you would otherwise have to make them redundant
  • those with caring responsibilities
  • individuals who are not employees if they are paid via PAYE. For example, office holders (including company directors), salaried members of LLPs, agency workers and limb (b) workers – though there are specific considerations for some –  please see the government guidance for details. The guidance is extensive and we strongly recommend reading it.

IMPORTANT – to be eligible for the grant, furloughed employees cannot undertake work for, or on behalf of the organisation. This includes providing services or generating revenue.

How to furlough employees

  • Employers should talk to their staff about making any changes to the employment contract. Equality and discrimination laws apply in the usual way when deciding who to furlough.You do not need to furlough all your employees to be eligible
  • To be eligible for the CJRS grant, employers must confirm in writing to their employee that they have been furloughed and this record kept for 5 years – at least until 30 June 2025
  • An employee can be furloughed for a minimum of 3 consecutive weeks. Employees can be furloughed multiple times, but for a minimum of 3 consecutive weeks each time
  • Where company directors are furloughed, a board minute is required and we recommend issuing a formal furlough notice. A furloughed director must not do any work that would generate commercial revenue or provide services to or on behalf of their company, but they may carry out duties to fulfil their statutory obligations as a company director.

How much can you claim?

  • 80% of your employees’ wages ( even if National Minimum Wage) – up to a maximum of £2,500
  • Minimum automatic enrolment employer pension contributions on the subsidised wage
  • grants will be prorated is only furloughed for part of a pay period
  • claims should be dated from the date the employee finishes work and starts furlough, not from the date the decision was made
  • employers NIC

How do you calculate employees’ wages?

  • Full or part time salary – 80% of salary as of 28 February 2020
  • Variable pay and employed for 12 months or more – highest of either same month’s earning from the previous year or average monthly earnings for 2019-2020 tax year
  • Variable pay and employed for less than 12 months – 80% of average monthly earnings since they started work
  • Include regular payments like wages, past overtime, fees and compulsory commission but exclude discretionary bonus (including tips), commission payments and non-cash payments.

Bates Weston administers the PAYE payrolls of over 300 clients and we are aware that the scheme can appear daunting. If we look after your payroll, we will guide you through the process. If you administer your own payroll, talk to us, we can help you through this.

How to make a claim?

To claim, you will need:

  • your ePAYE reference number
  • the number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
  • your bank account number and sort code
  • your contact name
  • your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

You make the claim using the amounts in your payroll – either shortly before or during running the payroll. Claims can be backdated until 1 March where employees have already been furloughed.

If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.

After you’ve claimed

HMRC will check your claim, and if you’re eligible, pay it to you by BACS to a UK bank account.

You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted.

 

 reference documents and useful links:

Update 20 April 2020 Bates Weston Blog on making a claim under CJRS

Update 16 April 2020 Treasury Direction clarifies Coronavirus Job Retention Scheme

Support for businesses through the Coronavirus Job Retention Scheme

Claim for your employees’ wages through the Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme: furlough guidance from the ICAEW

 

 

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