Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

The Extension: What it means for you

It has recently been announced that the Coronavirus Job Retention Scheme (JRS) will be extended until the end of October. The scheme will run for a further four months and Employees will continue to receive 80% of their monthly wages up to £2,500. However, companies will need to start sharing the cost of the scheme from August, with a statement released stating that employers would need to ‘share with the government the cost of paying salaries. Employers currently using the scheme will be able to bring furloughed employees back part-time during this period

Due to the recent extension of the scheme, it has been announced that during the period from 1 June to 31 October 2020 various features of the CJRS will change. These changes will introduce flexible working arrangements and contributions to CJRS costs by employers. The scheme will change on a month-by-month basis from June until October.

We have set out a summary of the changes on a month by month basis:

June 2020

  • The scheme will close to new entrants on 30 June 2020. Effectively, the final date that employers can furlough staff for the first time will be 10 June 2020.
  • As before, the government will continue to fund 80% of furloughed wage costs subject to the £2,500 cap.
  • As before, government will cover employer NIC and pension costs.

July 2020

From 1 July 2020, employers can bring previously furloughed workers back part-time. Employers will be responsible for covering payroll costs for time worked.

Government will cover the following costs for any hours not worked in the pay period:

  • 80% of furloughed wage costs (for hours not worked) subject to the £2,500 cap.
  • Employer NIC and pension costs (for hours not worked).

August 2020

From 1 August 2020, employers will be responsible for:

  • Covering payroll costs for time worked, plus
  • Pay for all employers’ NIC and pension costs.

Government will cover the following costs for any hours not worked in the pay period:

  • 80% of furloughed wage costs (for hours not worked) subject to the £2,500 cap.

September 2020

From 1 September 2020, employers will be responsible for:

  • Covering payroll costs for time worked.
  • Pay for all employers’ NIC and pension costs, plus
  • Pay for 10% of the CJRS wage costs for time not worked.

Government will cover the following costs for any hours not worked in the pay period:

  • 70% of furloughed wage costs (for hours not worked) subject to a revised cap of £2,187.50.

October 2020

For this final period, from 1 October 2020, employers will be responsible for:

  • Covering payroll costs for time worked.
  • Pay for all employers’ NIC and pension costs.
  • Pay for 20% of the CJRS wage costs for time not worked.

Government will cover the following costs for any hours not worked in the pay period:

  • 60% of furloughed wage costs (for hours not worked) subject to a revised cap of £1,875.

Clearly, these changes will require that the way employers calculate payroll for furloughed workers and make claims under the CJRS grants process will change month by month - until the scheme closes the end of October 2020.

Commencing on 1st July, the new Furlough Scheme is only eligible for previously furloughed employees.

There is enhanced flexibility with employees being able to return to work on a part-time basis and then furloughed for the hours that they are not working. 

  • The part-time working arrangements will need to be agreed in writing.
  • An employer cannot claim for more furloughed employees than the maximum number claimed for under any previous claim period.
  • Employees cannot go on to part-time furlough unless they have had a minimum of a consecutive three week period of furlough between 1st March and 30th June.

For employers who have employees on maternity, adoption or other parental leave (and are due to return to work in the next few months) there is still the option to furlough them. This includes those that have not had a previous furlough period. This means those employers and employees are not at a disadvantage.

Next Steps for Employers:

  • Consider any other options including phased returns to work, reduction in working hours, linking staff contracts to performance of business, short-time working or redundancies. Do not leave these conversations until later this year as staff will be less responsive. 
  • You have until 31st July to make any claims in respect of the period up to 30th June and thereafter you will be unable to claim for that period of the scheme.

More information can be found on HMRC’s website.

Time for planning

Due to the changes it seems that planning is paramount in regard to the running and maintenance of your company.

From 1 November 2020, employers will be faced with two choices:

  • Bring all furloughed employed back to normal pre-COVID working arrangements or
  • Make all or a selection of furloughed workers redundant.

In both cases, these choices will need careful consideration and in particular:

  • What level of activity will likely be re-established?
  • How will cash-flow, profitability and solvency be affected by choices made?
  • How will unwinding the furlough scheme be financed?

These are matters that will benefit from focused planning by working through various what-if scenarios.

Flexible furloughing

From 1 July, you can claim a more flexible grant for any employee you have previously received a Coronavirus Job Retention Scheme (CJRS) grant for, and who now returns to work on reduced hours. You can also continue to claim for employees who stay fully furloughed.

What you need to do next

  • Claim for periods ending on or before 30 June, by 31 J‌ul‌y – this is the last date you can make those claims
  • Agree the hours and shift patterns that you want your employees to work from 1 July
  • Keep a copy of the employee's usual hours including any calculations and the actual number of hours they have worked
  • Pay your employees' wages for the time they’re in work and apply for a job retention scheme grant to cover the remainder of their usual hours for which they are still furloughed
  • Claim for further furlough periods as needed – the first time you will be able to make a claim for days in July will be 1 July.

What to do if you have over-claimed

Some employers have contacted HMRC that they have claimed too much. If this applies to you, then all you need to do is tell HMRC when you next claim, so you can pay it back.

You will be asked when making your claim whether you need to adjust the amount to take account of a previous error. Your new claim amount will be reduced to reflect this. You do not need to take any other action but should keep a record of this adjustment for six years.

If you’ve made an error in a previous claim but do not plan to submit further claims, you need to contact HMRC to let them know, so that they can tell you how to repay the money.

Claiming for 100 or more employees?

Please use HMRC's new template to claim for periods starting on or after 1 July to ensure your claim is processed quickly and successfully. You can find this template HERE

Paying your employer National Insurance Contributions (NICs) and pension contributions

A condition of the CJRS grant is that you pay the related PAYE tax, NICs and pension contributions due on wages.

Until 31 July you can continue to claim these for the hours the employee is on furlough. From 1 August employers will no longer be able to claim for NICs and pension contributions.

If you think you may struggle to pay your PAYE tax and/or NICs from August, please contact HMRC as soon as possible, before they start action to recover the unpaid debt. They may be able to give you time to pay.

More information can be found on HMRC’s website.

Should you have questions or specific queries relating to the Coronavirus Job Retention Scheme or furloughing staff, please contact us on 01753 888211 or email info@nhllp.com. As ever, we are here to help you.

The information that we have provided is for general purposes only and therefore does not constitute professional advice. Appropriate professional advice should be sought for individual circumstances before any further action is taken.