Coronavirus Job Retention Scheme (CJRS)
A job support scheme has been set up following the Chancellor's 17 March announcement. The CJRS is similar to schemes that have already been set up elsewhere in Europe. We are expecting further guidance to be issued from the Government on the contributions to be made by employers post 31st July at the end of May and will update the page with information as soon as it is available.
Under the CJRS, “HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month". In this context ‘furloughed workers’ are non-working employees who are kept on the payroll, rather than being laid off. The employer has to designate these employees and submit relevant information to HMRC via a “new online portal”. This is to safeguard workers from being made redundant. The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and it was initially open for 3 months.
Rishi Sunak announced on 12th May that the Job Retention Scheme, set up to pay wages of workers on leave because of coronavirus, will be extended until the end of October.
He noted that there will not be any changes to the level of support for those on the scheme, 80% of their monthly wages up to £2,500, but that the government will ask companies to "start sharing" the cost of the scheme from August onwards.
Employers currently using the scheme will be able to bring furloughed employees back part-time.
Am I eligible?
All UK-wide employers with a PAYE scheme will be eligible – this includes the public sector, Local Authorities and charities.
How do I access it?
You will need to:
1. Designate affected employees as ‘furloughed workers’ and notify your employees of this change – changing the status of employees remains subject to existing employment laws and, depending on the employment contract, may be subject to negotiation.
2. The new online portal is live and can be accessed here. You will need to submit information to HMRC about the employees that have been furloughed and their earnings.
When can I access it?
HMRC have set up an online portal for reimbursement. If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
More details about the Job Retention Scheme have been announced. We have summarised the main points from the government website below:
- Employers can claim for 80% of furloughed employees' usual wage costs, up to £2,500 a month, plus the associated Employer NIC and minimum auto-enrolment Employer pension contributions on that wage
- Employers must have created and started a PAYE scheme on or before 19th March 2020 and have a UK bank account
- Furloughed employees must have been on the PAYE scheme on 19th March 2020 (this means that employees hired after the 19th March 2020 cannot be furloughed or claimed for in accordance with the scheme)
- To be eligible for the subsidy, when on furlough, an employee cannot undertake work for or on behalf of the organisation
- At a minimum, employers must pay their employee the lower of either 80% of their regular wage or £2,500 per month
- Whilst on furlough, the employee's wage will be subject to the usual income tax and other deductions
- Employers should discuss furloughing with their employees and make any changes to their employment contract in agreement with them. When employers are making decisions in relation to the process, equality and discrimination laws will apply in the usual way
- Employees can be furloughed for a minimum of 3 weeks
Read more about the scheme by visiting https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
FAQs about the Job Retention Scheme
- When does it start? Straight away and claims can be backdated to 1 March 2020 for as long as the employee hasn’t worked for you. HMRC has set up an online portal to pay these grants and payments have been made for claims submitted.
- How much can I claim back? – the lower of 80% of the wages cost or £2,500 per employee per month.
- Can I make up their wages with the remaining 20%? Yes
- I made someone redundant before the scheme was introduced. Can I now use this scheme? Yes. As long as the employee hasn’t worked for you then you can reinstate them and use this scheme.
- I don’t want to furlough someone completely as need them to do 40% of their hours. Can I still use the scheme? – NO. The employee has to stop working in the business completely.
- How will I make a claim? HMRC have set up a portal to administer the system which can be accessed here.
- What do I tell my employees? Check employment contracts to ensure the proper process is followed. Ensure that a fair process is followed ie if not furloughing full workforce, make sure the same process as redundancy is followed (ie fair, no discrimination etc). Let employees know what is happening and send them a letter confirming that they are being furloughed from xxxx, will receive pay of xxxxx and it will be reviewed on xxxxxx. Also explain that their employment status continues and that they must not carry out any work for the business.
- What is gross pay? Gross pay is the employees regular wage as at 19 Mar 2020. Fees, commissions or bonuses are not included.
- Can I claim back anything else? Employers National Insurance Contribution and minimum auto enrolment employers pension contributions can also be claimed back. If you top up the employee's wages, their additional Employers National Insurance Contribution and pension contribution cannot be claimed.
- An employee who is currently “furloughed” has indicated that they may pursue a temporary opportunity for work as a delivery driver whilst they are furloughed to supplement the 80% we will be paying them. Is this allowed we still be able to reclaim via the scheme for them if they do this? This is ok, if you as an employer agree it and the employee works outside of hours that they would usually work for your business.
- If we begin to make a claim for say 90 employees who have been furloughed and then two weeks later decide to furlough another 20 will HMRC accept two claims or want them all rolled into one claim. You can furlough different people at different times, but will need to submit them to the portal at the same time each month. You will need to identify and quantify the amount to be reclaimed. Furlough costs can only be reclaimed where an employee has been furloughed for at least 3 weeks.
- Furloughed staff cannot engage in fee earning work or providing a service but can they still receive internal comms from the business via their work email account? This is fine, but are excluded from being able to generate income for the employer.
- Does the employer NI/Pension contribution we can claim also apply to any amounts you are choosing to top up or just to the 80% furlough payment? If so, how do we calculate this? NI and pension can be claimed for the 80%, additional contributions due on topped up wages cannot be claimed.
- Can this operate for Owners/Directors who run the business and take minimal salary for PAYE/NI purposes and then take a monthly dividend? Yes, but only to the (typically) minimal salary aspect. Not the dividend. Such directors can furlough themselves even if they are sole employees. Technically they can't then work for the firm, but can continue to perform their statutory obligations as directors eg official legal filings etc.
- Can we furlough those that are self-isolating? For example, have medical conditions and cannot work from home? Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.
- What is the criteria to qualify an employee to furlough? Does the employer have to demonstrate that someone can't do the job? Furloughed workers are those whose employers cannot cover staff costs due to coronavirus, and as such they have been asked to stop working, but have not been made redundant. It is a consensual arrangement between employer and employee, and varies the contract of employment which remains in place. Furloughing is an alternative to redundancy.
- If somebody has been furloughed from their current job and come to us for a job as we are classed as key workers and need the staff can we employ them and it be classed as a second job? Yes, subject to consent of the employer. Employees are still under contract when furloughed, the terms of their contract could prevent them from working for another firm while employed by their current employer. There are special rules where employees volunteer as a key worker too.
- If we pay commission will the furloughed 80% salary be based on base salary only? Yes. Commission is ignored.
- What if staff don't agree to be furloughed? They will be at risk of redundancy. Furloughed workers are those whose employers cannot cover staff costs due to coronavirus, and as such they have been asked to stop working, but have not been made redundant.
- Is it expected that the Job Retention Scheme will apply to private households that have PAYE staff such as housekeeper, driver, maintenance team? All employers with PAYE payroll in place as at 19 March are eligible.
- How does the employee tax payment get worked out? Do employees still pay tax even though the government are paying the 80%? Yes, payroll taxes are computed as normal based on the payments made.
- If you have agency temps working PAYE through your company but working for a client and they started before 19th March but are finishing their contract shortly, can the agency furlough them? Yes, but only if they are not working.
- Can we require employees to take part of their annual holiday whilst on furlough? Normal contractual arrangements continue to apply, furlough does not change that. Statutory holiday is protected.
- Can company directors be furloughed? Yes, directors can furlough themselves even if they are sole employees. Technically they can't then work for the firm, but can continue to perform their statutory obligations as directors eg official legal filings etc
- Are we allowed to include furloughed staff for weekly catch up calls - like Keep In Touch days for Maternity cover? Yes, provided they do not generate revenue for the firm.
- We have an employee on a short-term contract, ending soon, but was due to be renewed, would we be able to renew their contract and then furlough them? Yes, the criteria is principally around the 19 March payroll.
- Will the £2,500 cap be pro rata for part month claims i.e. furloughed part way through March? Pro-rata will be applied to the relevant payroll run.
- Where the furlough period is not in multiples of 3, can only 3 full weeks be claimed or is it concurrent period that is looked at? 3 weeks is the minimum length, not a unit of length.
Statutory sick pay (SSP)
Businesses with fewer than 250 employees will be refunded the full cost of providing SSP to any employee off work for up to 14 days because of coronavirus.
Annual Leave Rules Relaxed
Rules on carrying over annual leave to be relaxed to support key industries during COVID-19. Meaning that workers who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry it over into the next 2 leave years.