On 20 March 2020, in response to the coronavirus outbreak, the Chancellor announced a new coronavirus job retention scheme (CJRS) for all UK employers with a PAYE scheme, including the public sector and not-for-profit entities, whatever their size. The scheme is due to run until 31 October 2020 to help support employers retain staff during the current pandemic by covering certain costs of putting them on furlough. On 12 June 2020, changes were announced to CJRS, with effect from 1 July 2020.
What are the key features of the scheme?
Initial phase: 1 March 2020 to 30 June 2020. For this initial period:
- furloughed employees must not undertake any work for their employer (they may undertake certain training/study and directors may also undertake certain statutory duties);
- employees must be on furlough for a minimum period of 21 days;
- no new employee can be admitted to the scheme for a period ending after 30 June – this, combined with the 21 day minimum furlough period, means the last date on which an employee could be furloughed for the first time was 10 June 2020 (apart from certain exceptions such as those returning from maternity leave); and
- 31 July 2020 is final date for submitting claims.
Second phase: 1 July 2020 to 31 October 2020. For this second period:
- the scheme is only available to employers that have already used CJRS in the initial period;
- only employees who have previously been furloughed can be included;
- there is no minimum furlough period and employees can work any amount of hours – be flexibly furloughed;
- furlough claims can only be made for the maximum number of employees included in a claim made for a period ending on or before 30 June – they must include details of usual hours (based on calendar days as detailed in the HMRC guidance) and the hours actually worked;
- no claim period can extend across a calendar month end and each claim made by employer must be for a week or more (unless for a short period at the start or end of a month);
- 30 November 2020 is the final date for submitting claims.
What support do you get?
The scheme updates mean that the following will apply for the periods people are furloughed.
- March to July: The Government will pay 80 per cent of regular wages for each furloughed employee up to a cap of £2,500, as well as employer National Insurance contributions (ER NICs) and pension contributions. Employers are not required to pay anything.
- August: The Government will pay 80 per cent of regular wages for each furloughed employee up to a cap of £2,500. Employers will pay ER NICs and pension contributions.
- September: The Government will pay 70 per cent of regular wages for each furloughed employee up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and at least 10 per cent of regular wages to make up 80 per cent total regular wages up to a cap of £2,500.
- October: The Government will pay 60 per cent of regular wages for each furloughed employee up to a cap of £1,875. Employers will pay ER NICs and pension contributions and at least 20 per cent of regular wages to make up 80 per cent total regular wages up to a cap of £2,500.
- February: A bonus of £1,000 per person for employers who bring back someone who was furloughed and is continuously employed by them through to the end of January called the Job Retention Bonus.
Should I review claims?
Employers must keep CJRS records for six years and furlough agreements for five years. HMRC may want to review claims to see if they are correct. Legislation is being brought in covering penalties and therefore it is recommended employers should check previous claims. The HMRC facility to adjust claims should be used, either online by deduction from a future claim for overclaims or by contacting HMRC regarding underclaims, as soon as possible, noting the deadlines for claims and corrections to be made before penalties apply.
Of course, HMRC might not be the only interested party, as your auditors may also decide that your use of CJRS needs to be reviewed as part of their audit work.