Coronavirus Job Retention Scheme – Information for employers
Updated: November 5 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 CJRS was initially put in place for a four-month period from 1 March 2020, but this was extended to the end of October. From 1 July, employers could also bring employees back to work part-time and claim the CJRS grant for their normal hours not worked.
Between August and October 2020, the CJRS was tapered and employers were asked to share the costs of the scheme with the Government. But the overall financial limits of the scheme remained (80% of salary costs per employee capped at £2,500 per month).
The tapering of the scheme operated as follows:
- June and July – employers were not required to contribute to the costs of the furlough scheme.
- August – the Government paid 80% of wages up to a cap of £2,500 and employers paid employers’ NI contributions and pension contributions.
- September – the Government paid 70% of wages up to a cap of £2,187.50 and employers paid employers’ NI contributions, pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
- October – the Government paid 60% of wages up to a cap of £1,875 and employers paid employers’ NI contributions, pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
- The extended CJRS will operate as the previous scheme did, with businesses being paid upfront to cover wages costs. There will be a short period when government changes the legal terms of the scheme and updates the system. Businesses will be paid in arrears for that period.
- The CJRS is being extended until the end of March 2021. The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work.
- As under the current CJRS, flexible furloughing will be allowed in addition to full-time furloughing.
- Further details, including how to claim this extended support through an updated claims service, will be provided shortly.
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 by 23:59 on 30 October 2020. However, employers must have made a Real-Time Information (RTI) submission to HMRC on or before 30 October 2020.
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.
Key information for employers
- Employees could not work for their employer up until the end of June 2020, however, between July and October 2020 people could 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. Part-time furlough arrangements should be possible under the further extension.
- 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.
- Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.
- Employers can claim for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. The calculations will broadly follow the same methodology as previously used under the CJRS.
- When claiming for furloughed hours, employers will need to report and claim for a minimum period of seven consecutive calendar days.
- Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
- For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
- Employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.
- The government expects that publicly-funded organisations will not use the scheme, as has already been the case for CJRS, but partially-publicly-funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.
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 will be published by government and employers should refer to the government website for the most up-to-date information.
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