4 Things Employers Need to Know About Coronavirus Job Retention Scheme & Furlough Leave Jun 30, 2020Views: 295
The Coronavirus Job Retention Scheme allows for employers to access financial support to continue paying part of their employees’ salary that would otherwise have been laid off due to COVID-19. The scheme was originally available for four months starting from the 1st of March 2020, but this has since been extended until the end of October.
If you have any employees who have been placed on a leave of absence, they would be considered a furloughed employee. Employers can claim for 80% of furloughed employees’ usual monthly wage cost, up to £2,500 a month, plus the associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. An employer can also choose to top up an employee’s salary beyond this but they are not obliged to do so under this scheme.
As the government and HMRC adapt to COVID-19 and its implications for our businesses and economy, changes have been made to the scheme in the interest of facilitating speedy growth and recovery. These changes can be complex and confusing, but employers need to understand them nonetheless. Which is why we’ve broken them down into simple terms, so you don’t have to.
What You Need To Know About Coronavirus Job Retention Scheme & Furlough Leave
HMRC have published full guidance on all the scheme changes on GOV.UK. Here is a brief breakdown of the scheme in its entirety and expected changes to come throughout the months ahead.
Changes To Scheme
The furlough scheme will continue in its current format, paying 80% of employees’ wages up to £2,500 with no employer contribution required. But from August, 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.
In August, the government will continue to pay 80% of wages up to a cap of £2,500, but employers will be required to pay employer National Insurance contributions and employer pension contributions. For the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed.
For 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 need to pay employer NI and pension contributions plus 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 need to pay employer NI and pension contributions plus 20% of wages to make up 80% of the total, up to a cap of £2,500. After 31 October, the government contributions will finish and the scheme will come to an end.
Flexibility For Part-Time Employees
The scheme has been made more flexible from 1 July to enable employers to bring back furloughed employees on a part-time basis, and still receive a grant for when the employees are not working.
The government will continue to pay 80% of furloughed employees wages for any normal hours they do not work, up until the end of August, but the employer will have to pay employees for the hours they do work. For example, if a furloughed worker returns to work for two days per week, they would need to be paid as normal for these two days, while the government would cover the other three days. This new flexibility will help with businesses reopening and help boost the economy.
Scheme Closed To New Entrants
From July onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30th June. Employers will have until 31st July to make any claims in respect of the period to 30th June.
Also, for periods starting on or after the 1st July, the maximum number of employees you can claim for in any period cannot be higher than the maximum number you have claimed for in a previous period. For example, if your highest single claim for periods up to 30th June was for 100 people, you can’t claim for more than this number in later periods. An exception to this is where an employee is returning from statutory parental leave after 10th June and meets the qualifying criteria to be furloughed for the first time.
Making a CJRS Claim
Employers will need to make a claim for wage costs and this needs to be done on the gov.uk website. You can make your claim up to 14 days in advance, at the point you run your payroll or after you have run your payroll. It is up to you to decide the length of your claim period. In deciding what your claim period is, you should think about how frequently you run your payroll. The length of claim period will be different for different employers.
You cannot make more than one claim during a claim period. This means you should include all of the employees that you want to furlough for that claim period, because you will not be able to make another claim for the same period or one that overlaps.
Claim periods starting on or after 1st July 2020 must start and end within the same calendar month. Therefore, pay periods which span two calendar months must be broken down into two separate claims. This is to accommodate the fact that the scheme is changing from month to month.
It is possible to make more than one claim in each month, but each claim must be for a minimum period of at least 7 days. The only exception to this is if you are claiming for the first few days or the last few days in a month, known as 'orphan days'. In this instance, you will need to make two claims (one for each month).
Where employees have returned to working part time from 1July, 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
BrightPay includes a CJRS Claim Report. This report can be used to ascertain the amounts needed for input into HMRC's online service.
Don’t Miss Out On The Latest Updates - Join Our Free Webinars
At BrightPay, we know how important it is to keep abreast of the most recent developments when it comes to COVID-19, especially as we navigate unchartered territories together. That’s why we’re holding regular webinars to share with you all news relating to HMRC updates, what employers need to know and how you can make sure you’re complying with best practices at all times.
Click here to watch our previous webinars on-demand, where we cover everything from important COVID-19 payroll updates to return to work government policies and more.
To receive email notification letting you know when we’re holding our next webinar, sign-up to our mailing list and ensure you don’t miss out on the latest updates for your business.
Deepshikha Gupta likes this.
You need to be logged in to comment