Coronavirus Job Retention Scheme: What you need to know

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Coronavirus Job Retention Scheme: What you need to know

In March 2020, the UK Government introduced the Coronavirus Job Retention Scheme (CJRS) to protect the countries job market by helping employers keep their employees on payroll during the pandemic.

Now with the number of cases of COVID-19 slowly decreasing, the government wants to ‘kickstart the economy’ and has released further guidance on the close of the scheme on the 31st of October 2020, and the new Flexible Furlough Scheme (FFS) to help do just that.

This guide will detail FAQ’s on the changes to the scheme and any other notable points.

How does the Flexible Furlough Scheme (FFS) work?

Employers can place employees on furlough leave, requiring employees to perform no work and not to attend the place of work. From 1st July, it is possible to furlough staff for part of their normal working hours, and continue to receive a proportional furlough grant for that time, while also getting them to work for you part-time and paid for by you.

An employee on the FFS can work any working pattern agreed by you, and this can change week to week.

Up until 31 July, the Government will reimburse 80% of the wage cost of furloughed workers up to a cap of £2500 per month (as long as they were furloughed for the first time on or before 10 June). Employers can, but are not obliged to, make up the 20% difference. Grants will be prorated if the employee is working part-time and is only furloughed for part of a pay period.

In July, the government will pay 80% of wages up to a cap of £2500 for the hours the employee is on furlough, as well as Employer NI contributions and Employer pension contributions for the hours the employee is on furlough. Employers will have to pay employees for any hours that they work.

For August, the government will continue to pay 80% of wages up to the cap of £2500 for furloughed hours but employers will pay for the Employer NI contributions and pension contributions. In September the government will pay 70% of wages up to a cap of £2187.50 and in October this will reduce to 60% up to a cap of £1875.00.

How long will the scheme last?

The scheme will close on 31 October 2020. Claims for the period to 30 June 2020 must be made by 31 July 2020. No new entrants to the scheme will be accepted after 30 June 2020 and after that date, only those who have previously been furloughed for at least three weeks will be eligible – this means that in practice the final date to furlough an employee for the first time is 10 June 2020. The exceptions to this are employees that are returning from maternity or other family leave or military reservists returning after a period of mobilisation.

Can any type of business use the scheme?

The CJRS is open to businesses, charities, recruitment agencies where their agency workers are paid through PAYE and public authorities.

However, for public and non-public authorities, which receive public funding for staff costs already, then it is expected that this public funding will be used to continue to pay employees and that they will not be furloughed.

Which employees are covered by the scheme?

You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020.

After 1 July 2020, the scheme will only be available to employers that have previously used the scheme for employees who have previously been furloughed for a minimum of 3 weeks unless returning from maternity leave, other family leave or an army reservist returning from mobilisation. In any claim period, the number of employees you can claim for cannot exceed the maximum number you claimed for under any previous claim under the current CJRS.

What is the process for obtaining payments?

The Government have published a detailed guide on obtaining payments here.

What information do I need?

To claim, you will need:

to be registered for PAYE online
your UK bank account number and sort code (only provide bank account details where a BACS payment can be accepted)
the billing address on your bank account (this is the address on your bank statements)
your employer PAYE scheme reference number
the number of employees being furloughed
each employee’s National Insurance number (you will need to search for their number if you do not have it, or contact HMRC if your employee has a temporary number or does not have one at all)
each employee’s payroll or employee number (optional)
the start date and end date of the claim
the full amounts that you’re claiming for including:
employee wages
employer National Insurance contributions (for claims up to 31 July)
employer minimum pension contributions (for claims up to 31 July)
your phone number
contact name

You also need to provide either:

your name
your Corporation Tax unique taxpayer reference
your Self Assessment unique taxpayer reference
your company registration number

For the claim period you’ll also need:

the number of usual hours your employee would work in the claim period
the number of hours your employee has or will work in the claim period
you will also need to keep a record of the number of furloughed hours your employee has been furloughed in the claim period

Exiting furlough

Before the CJRS comes to an end in October you need to plan for employees to return to work. You should to notify employees in writing with reasonable notice about the arrangements. And all records should be kept on file.

Our HR Software can help you do all of this with ease, with our new furlough letter generator that can create furlough agreement letters in seconds that go directly into your furloughed employees file online, safely and securely.

However, before then if you cannot afford to retain employees on furlough once the scheme changes in August with increased employer contributions , or you need to reduce staffing levels generally then this is when you should start considering redundancy.

If you issue notice of redundancy whilst an employee is on furlough, then you will usually have to pay 100% of pay during the notice period, but could still reclaim the 80% (or appropriate amount depending when notice is issued) from the CJRS.

However, you cannot reclaim grants for redundancy pay, this will need to be funded by the organisation.

The Chancellor Rishi Sunak has also just recently announced that businesses will be paid a £1,000 bonus by the government for every furloughed employee they bring back to work.

How we can help

This is just a small taster of the materials we provide to our customers to help them tackle the Coronavirus head-on.

Why not give our friendly team a call on 0333 014 3888 or email info@citrushr.com to find out all the great ways we can help your business with HR.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Terms of Website Use. If you require professional advice, please get in touch.