On 12th June HMRC amended eight pieces of guidance regarding the coronavirus job retention scheme (CJRS). What does this mean for employers and employees?
Periods to claim and when
Claims under the existing CJRS scheme must be made by 31 July. Claims under the new CJRS cannot be made until 1 July.
Two separate claims will be needed for straddling furloughs, with furlough days up to 30 June 2020 to be included in the June claim and then a new one starting on 1st July.
Under both the new and old CJRS, claims cannot be made more than 14 days before the end date of the claim, so claims with an end date of 31 July cannot be made until 18 July.
From 1 July, claim periods will no longer be able to overlap months. Employers who previously submitted claims with periods that overlapped calendar months (ie if payroll is every four weeks) will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the scheme.
Between March and June 2020, each furlough period must last for at least three consecutive weeks. The minimum claim period is reduced to one week from 1 July 2020.
Who can be in a claim from 1 July?
An employee can only be included in the claim from the 1 July if they had been furloughed for a minimum of 21 days at any point between 1 March 2020 to 30 June 2020.
From 1 July 2020, employees can now work and be furloughed in the same pay period, and even on the same day. If employers want to take advantage of this flexibility they will have to calculate all of the following for the employee:
- his or her ‘usual hours’
- actual hours worked
- furloughed hours worked
The employer may then claim under the CJRS for the difference in normal working hours and actual working hours.
Usual Hours are either:
- Contracted hours for salaried employees
- Specific formula for zero hours or variably paid employees
To calculate an employee’s furloughed hours, deduct the actual hours worked from the usual hours. Employers will be expected to report the worked hours and the usual hours in the CJRS claims portal. Only where there are 100 or more employees in a claim can the details be submitted on a spreadsheet.
Since April 2019 employers in Great Britain have had to show the number of hours worked on payslips if pay varies based on hours worked. This requirement will apply to all employees who are flexibly furloughed from 1 July. Whilst the legislative requirement is to show the working hours as a total for the pay period, employers may choose to show furloughed hours as well for transparency.
Is the new furlough capped the same as the old one?
The £2,500 wage cap continues to apply for July and August. This applies to each employment and is not aggregated, it is prorated to the hours in the pay period that the employee is furloughed, with this apportionment based on calendar days. The employer’s NIC threshold and pension threshold will also be apportioned.
What if the employee’s salary should have gone up with National minimum wage?
This will be an important consideration from 1 July for any employees who are working as well as being furloughed for part of the pay period. They must be paid national minimum wage (NMW) for each hour of work and training. Care must be taken for apprentices in particular.
Are there new percentages to claim back?
The grant consists of:
- up to 80% of the salaries of employees, subject to a cap of £2,500 per month for the period March to August 2020
- up to 70% of salaries subject to a cap of £2,187.50 for September 2020
- up to 60% of salaries subject to a cap of £1.875 for October 2020.
As with the previous version of the Coronavirus Job Retention Scheme (CJRS), employers may still choose to top up employee wages above the scheme grant at their own expense if they wish.
From 1st August the Employer will pay the employer’s national insurance and the employers pension contribution for all pay, even the furlough part.
What should I do now as the employer?
- Start your flexible furloughing of employees from 1 July onwards. You can decide the hours and shift patterns they work to suit the needs of your business – you’ll pay their wages for the time they’re in work and can apply for a job retention scheme grant to cover any of their usual hours they are still furloughed for. You can still keep employees on full furlough if you need to.
- Claim for periods ending on or before 30 June, by 31 July – this is the last date you can make those claims.
- Claim for further furlough periods as needed – the first time you will be able to make a claim for days in July will be 1 July.
If you feel you would like more information then the Gov.uk website has full guidance on this grant: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme