Updated Coronavirus Job Retention Scheme (CJRS) as of 29 March 2020
Under this 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 the crisis.
In order to access this scheme, the affected employees will need to be classed as “furloughed workers”. Please note changing the status of an employee remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
‘Furlough leave’ is a new type of indefinite leave where the Government reimburses the employer for wages costs. This has been introduced as an alternative for employers who might have otherwise implemented redundancies, lay off, unpaid leave or other measures for their employees. All UK businesses are eligible to claim.
The scheme is available for at least three months from 1st March 2020. The online portal will be available by the end of April 2020. Employers must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
What costs can be recovered?
The CJRS allows for 80% of wages costs to be recovered up to £2,500 per month per employee. There is no limit on the number of employees or the duration. Wages costs can include wages, pension contributions and Employer NI contributions.
All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
What can employers claim?
Employers will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month.
HMRC will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.
The calculation for the claim will vary depending on how your employees are paid, ie full-time, part-time, employees whose pay varies, etc.
What do you as an employers need to do?
Employers and employees will need to agree to the employee being designated as a ‘furloughed worker’. We recommend employers send a letter or email to the employee concerned and request they agree to the change in status in writing.
Employers will then need to submit details to HMRC through a new online portal which is currently being set up.
Please note employees cannot elect to be a furloughed worker without their employer’s agreement.
As employer, are you required to “top up” the pay to 100%?
The answer is NO you do not. Some employers may wish to and some may not be able to. What is important is that it is made clear to the employees concerned the approach taken.
What happens in respect of employees that have already been dismissed or taken unpaid leave?
The scheme is backdated to 1st March 2020 and employers are urged by the Government to take back anyone they had already dismissed and convert them to this leave instead. The same will apply with anyone who is on unpaid leave.
When is an employee not classed as a “furloughed worker”?
Furlough leave is for anyone that would have otherwise been laid off or made redundant. It does not apply to those employees which have agreed to reduce their hours or to a pay cut and they are still required to work.
What does this mean for the employees?
The employees classed as “furloughed workers” will remain on the employer’s payroll and will continue to accrue holiday and service.
What information will you need to make a claim?
The information employers will need to make a claim is as follows:
• your ePAYE reference number
• the number of employees being furloughed
• the claim period (start and end date)
• amount claimed (per the minimum length of furloughing of 3 weeks)
• your bank account number and sort code
• your contact name
• your phone number
Employers will need to calculate the amount to claim. HMRC will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live. However, employers will be liable to pay ER NI contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings, unless an employee has opted out or has stopped making contributions.
HMRC will retain the right to retrospectively audit all aspects of your claim.
Employers can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.
What employers will need to do after making the claim?
Once HMRC have received your claim and you are eligible for the grant, HMRC will pay it via BACS payment to a UK bank account.
Employers should make their claim in accordance with actual payroll amounts at the point at which the payroll is run or in advance of an imminent payroll.
Employers must pay the employee all the grant received in respect of the employees gross pay, no fees can be charged from the money that is granted.
How ansteybond can help?
If you have agreed with your employees that they will be classed as “furloughed workers”, ansteybond will be able to assist with the reporting of this change to HMRC via their new portal for this scheme. Please contact Jennifer Gordon for further information.
Anstey Bond HR Limited can provide assistance in respect of negotiating the change in the employees’ status, review of contracts of employment, drafting of letters to opt for the CJRS , advice on employment law related issues with working from home, GDPR issues and any other HR and employment law related query you may have. We offer a fixed rate subscription which can be paid monthly with interest free payments. Please contact Claudia Rowell for further information.
We are ourselves issuing regular updates via our website and e-mail cannons. If you are not receiving these and would like to be added to the list please e-mail [email protected] with the subject “Add me to your COVID-19 e-mails”.