PHTM COVID-19 FINANCE UPDATE
CORONAVIRUS JOB RETENTION SCHEME (CJRS) FURLOUGH UPDATE
On 29th May the Chancellor, Rishi Sunak, announced more details about the extension to the Coronavirus Job Retention Scheme (CJRS), with the key details outlined below for you.
FLEXIBLE FURLOUGHING
From 1st July 2020, you’ll have the flexibility to bring previously furloughed employees back to work part-time – with the govern- ment continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.
You can decide the hours and shift patterns that your employees will work on their return and you will be responsible for paying their wages in full while working. This means that employees can work as much or as little as your business needs, with no mini- mum time that you can furlough staff for.
Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for fur- loughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer peri- ods such as on monthly or two weekly cycles if you prefer. You 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.
If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.
EMPLOYER CONTRIBUTIONS
From August, the government grant provided through the job retention scheme will be slowly tapered. • in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
• in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pen- sion 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
• in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work –
JUNE 2020
If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should not be significantly impacted by that part of the tapering of the government contribution.
Around a quarter of CJRS monthly claims relate to wages that are below the threshold where employer NICs and auto enrol- ment contributions are due, and so no employer contribution will be required for these furloughed employees in August.
IMPORTANT DATES
It’s important to note that the scheme will close to new entrants from 30th June. From this point onwards, you will only be able to furlough employees that you have furloughed for a full three- week period prior to 30th June.
This means the final date that you can furlough an employee for the first time will be 10th June for the current three-week fur- lough period to be completed by 30th June. Employers will have until 31st July to make any claims for the period to 30th June.
GUIDANCE AND SUPPORT
Further support for employers and agents on how to calculate claims with this extra flexibility will be available by 12th June, including webinars and detailed online guidance. For informa- tion about how to claim, go to
GOV.UK and search 'Coronavirus Job Retention Scheme'. Please do not call us for more informa- tion, everything you need to know about this scheme will be published online on:
https://www.gov.uk/guidance/claim-for-wages-through-the- coronavirus-job-retention-scheme
PROTECT YOURSELF FROM SCAMS
Stay vigilant about scams, which may mimic government messages as a way of appearing authentic and unthreatening. Search 'scams' on
GOV.UK for information on how to recog- nise genuine HMRC contact. You can also forward suspicious emails claiming to be from HMRC to
phishing@hmrc.gov.uk and texts to 60599.
I hope this information helps and supports your business. We’ll update you on scheme developments over the coming weeks.
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employers will pay ER NICs, pension contributions and 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 pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500 the cap on the furlough grant will be proportional to the hours not worked.
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