Coronavirus Job Retention Scheme – Information for employers
Updated: June 2 2020
Chancellor Rishi Sunak has announced measures to support businesses and their employees, including the Coronavirus Job Retention Scheme (CJRS). This article summarises key information for employers.
What is it?
The CJRS is a temporary scheme designed to support employers whose operations have been severely affected by coronavirus. It allows employers to furlough employees for whom there is currently no work.
The scheme will be open to all UK employers for at least four months, backdated to 1 March 2020.
The CJRS will close to new entrants from 30 June 2020. From this point, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June 2020 (meaning the last date an employee can be furloughed for the first time is 10 June).
The CJRS was initially put in place for a four-month period from 1 March 2020, but this has now been extended to the end of October 2020. The scheme will continue in its current form until the end of July, except that from 1 July, employers can bring employees back to work part-time and claim the CJRS grant for their normal hours not worked. We are expecting further guidance on 12 June 2020 on how to calculate flexible furlough claims.
Between August and October 2020, the CJRS will be tapered and employers will be asked to share the costs of the scheme with the Government. But the overall financial limits of the scheme will remain (80% of salary costs per employee capped at £2,500 per month).
The tapering of the scheme will operate as follows:
- June and July – employers are not required to contribute to the costs of the furlough scheme.
- August – the Government will pay 80% of wages up to a cap of £2,500 and employers will pay employers’ NI contributions and pension contributions.
- September – the Government will pay 70% of wages up to a cap of £2,187.50 and employers will pay employers’ NI contributions, pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
- October – the Government will pay 60% of wages up to a cap of £1,875 and employers will pay employers’ NI contributions, pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
Who is eligible?
Any UK organisation with employees can apply, including:
- Recruitment agencies (agency workers paid through PAYE)
- Public authorities
Employers must have created and started a PAYE payroll scheme on or before 19 March 2020. However, employers must have made a Real-Time Information (RTI) submission to HMRC on or before 19 March.
Affected employees will need to be designated as ‘furloughed workers’ and the leave must be taken in minimum blocks of three weeks to be eligible for funding.
Employers can still make employees redundant whilst they are on furlough leave or afterwards.
It is not envisaged that many public sector organisations will be using the scheme as most public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.
In addition, where employers receive public funding for staff costs, and that funding is continuing, employers should use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them.
How to furlough employees
Employment law requirements still apply, therefore, if employers who want to pay employees less than 100% pay will need to do so by:
- Utilising existing contractual lay off clauses.
- Imposing the change – most employers will need to follow a formal contract change process and collective consultation rules apply where 20 or more individuals are involved.
Guidance for employees during furlough
- Employees cannot continue to work for their employer up until end of June 2020, however, between July and October 2020 people can return to work part time, but employers can still claim the grant for normal hours not worked. Any amount of working time and any shift pattern can be agreed with the previously furloughed staff.
- Employees can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of their employer – any activities undertaken while on furlough leave must be in line with the latest Public Health guidance.
Who you can claim for
- Employees who were on the PAYE payroll on 19 March 2020 and on any type of contract, including: full-time employees; part-time employees; fixed term employees; employees on agency contracts; and employees on flexible or zero-hour contracts.
- Employees who were made redundant or who stopped working for their employer on or after 28 February 2020 and prior to 19 March 2020, if they are rehired by their employer. However, an RTI submission notifying payment in respect of these employees to HMRC must have been made on or before 28 February 2020.
- Employees who are shielding.
- Employees on maternity (or similar) leave can continue to draw Statutory Maternity Pay (SMP), or similar, payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed, save that mothers must take the mandatory two weeks’ leave immediately following the birth of the baby.
- Employees with caring responsibilities such as those who need to look after children.
- Employees on sick leave or self-isolating as a result of coronavirus, may be entitled to Statutory Sick Pay (SSP), can placed on furlough leave but they will then cease to receive sick pay and will receive furlough pay instead. It should be noted that a claim can be made for both the CJRS and the SSP scheme for the same employee but not for the same period of time. In addition, if furloughed employees become ill they must be paid at least SSP and it is up to the employer to decide whether to move these employees onto SSP or keep them furloughed, at their furloughed rate.
- Employees with more than one job can be furloughed for each job. Employees can be furloughed in one job and receive a furloughed payment but continue working for another employer and receive their normal wages.
- Employees who TUPEd after 19 March 2020 – the updated guidance confirms such employees can be covered by the CJR scheme.
Individuals who are not employees
As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE:
- Office holders (including company directors)
- Salaried members of Limited Liability Partnerships (LLPs)
- Agency workers (including those employed by umbrella companies)
- Limb (b) workers
Further guidance on the above can be obtained here.
- Apprentices can be furloughed, however, the Apprenticeship Minimum Wage/National Living Wage/National Minimum Wage must be maintained. Therefore, employers will need to cover any shortfall.
- Individuals can furlough employees such as nannies, provided they are paid through PAYE, and sent HMRC an RTI submission notifying a payment in respect of the employee on or before 19 March 2020.
- Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme. However, it is expected that an administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers. For instance, this could be as a result of an administration and pursuit of a sale of the business.
Who isn’t covered
- Employees working on reduced hours, or for reduced pay.
- Employees on unpaid leave, unless they were placed on unpaid leave after 28 February 2020.
The claim – what is included and what is not?
- Employers can claim for 80% of the employee’s regular wage capped at £2,500 per employee per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions.
- The employee’s regular wage does not include fees, commission and bonuses.
- If an employer offers enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that can be claimed through the scheme.
- Employers can choose to provide top-up salary in addition to the grant but do not have to, nor will it be funded will not be funded through the scheme.
- Employees’ wages will be subject to the usual income tax and other deductions.
How to claim
- Employers will need to run a payroll and then submit information to HMRC via a new online portal, which became live on 20 April 2020.
- Employers can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for.
- Employers can only claim once every three weeks, so for example, you cannot get weekly reimbursement. Claims can be backdated to 1 March 2020.
- Claims can be backdated to 1 March 2020, if applicable, but will only be eligible to claim once the employee has been furloughed and stopped working.
- Once the claim has been approved, HMRC will pay it via BACS payment to a UK bank account. HMRC are working urgently to set up a system for reimbursement. The first set of payments are expected late-April 2020.
What employers will need in order to claim
- ePAYE reference number
- The number of employees being furloughed
- The claim period (start and end date)
- The amount claimed (per the minimum length of furloughing of three weeks)
- Bank account number and sort code
- Contact name
- Phone number
You will also need to provide either:
- Employer name
- Corporation Tax unique taxpayer reference
- Self Assessment unique taxpayer reference
- Company registration number
Employers will need to calculate the amount they are claiming. HMRC will retain the right to retrospectively audit all aspects of the claim.
If you are putting more than 100 employees on furlough then employers will need to upload a file containing each employee’s:
- Full name
- National Insurance number
- Payroll number (optional)
- Furlough start date
- Furlough end date (if known)
- Full amount claimed
Holiday and furlough
The updated guidance now clarifies that individuals can take periods of holiday during furlough leave and should be paid at normal pay rate and not the furlough rate.
Further updated guidance is being published most weeks and employers should refer to the Government website for the most up to date information.
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If your organisation is affected by coronavirus and you require advice, then please get in touch with one of the team who are available to assist you during these challenging times.
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