UPDATE: 5 NOVEMBER 2020
Chancellor Rishi Sunak has confirmed that he will extend the furlough scheme until the end of March.
Furlough scheme extended
- The new Job Support Scheme has been delayed, and furlough scheme extended
- Employees can be furloughed if they were on a payroll filed with HMRC by 23:59 on 30 October 2020
- The Government will continue to pay 80% of the employees’ wages up to £2,500
- Employers will pay their national insurance and pension contributions
- Flexible furlough is still allowed
- Portal opens on 11 November
- When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days
- Claims cannot cross calendar months and will need to be submitted by day 14 of the following month. As with the current CJRS system, pay periods that cross calendar months will need to be claimed in 2 separate claims
- As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish
- The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.
Coronavirus Job Retention Scheme (CJRS)
The original job support scheme was set up following the Chancellor’s 17 March announcement. The CJRS is similar to schemes that have already been set up elsewhere in Europe.
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, would 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.
As such from ‘flexible furlough’ was introduced from 1 July so that employees could be brought back to work part time and non working hours would be covered by the government to some degree.
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
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.