Coronavirus Job Retention Scheme (CJRS): Detailed Update
This update covers further points of detail of the changes taking place to the Coronavirus Job Retention Scheme (CJRS) on 1 July 2020. The revised measures mean that effectively these new arrangements constitute a new scheme. Employers therefore have until only 31 July 2020 to make any claims in respect of periods ending on or before 30 June 2020.
From 1 July employers can only claim the CJRS grant in full or for those employees they bring back to work, where the employee has previously been furloughed for a minimum of three weeks up to 30 June. The employee will be able to work a flexible shift pattern and the employer will still be able to claim CJRS grant, though this will be limited to the employee’s normal hours not worked. The existing scheme will close to new employees on 30 June. Given that there is a minimum furlough period of 3 weeks, this means that the employee must be put on furlough on or before 10 June to qualify.
The amount of the grant is being reduced from 1 July until the date the scheme will end on 31 October as summarised here:
|Month||Grant Details (pro-rated for part time workers)|
|July||Still paid up to 80% of normal wages, with a cap of £2,500 for full time furlough plus NI and pension contributions for furloughed hours. Employer needs to pay normal contractual wages for the hours actually worked and ErNI and Pension contributions pro-rated in respect of the hours worked.|
|August||Still paid up to 80% of normal wages, with a cap of £2,500 for full time furlough. Employer needs to pay ErNI and Pension contributions.|
|September||Still paid up to 70% of normal wages, with a cap of £2,187.50 for full time furlough. Employer needs to pay ErNI and Pension contributions and must pay the employee at least 10% of normal wages for hours furloughed.|
|October||Still paid up to 60% of normal wages, with a cap of £1,875 for full time furlough. Employer needs to pay ErNI and Pension contributions and must pay the employee at least 20% of normal wages for hours furloughed.|
The employer continues to be responsible for paying staff in accordance with their contract of employment. There have been no changes to the rights afforded to employees under employment law and employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing. Payment of net wages, PAYE and NIC remain the responsibility of the employer.
Under the new scheme starting on 1 July:
- Employees must continue to be paid at least 80% of their reference salary, pro-rated for hours not worked, (up to £2,500 per month for full time furlough but this cap pro-rated to the proportion of normal hours not worked) to qualify for the grant from 1 July to 31 October.
- A claim can only be made for a period starting on or after 1 July if a claim has previously been made for an earlier period.
- The maximum number of employees for whom a claim can be made for any one period cannot exceed the maximum number of employees claimed for any period under the old (pre 30 June) scheme. This could be relevant where for example staff on furlough are rotated.
- A claim period must be a minimum of one week.
- Claim periods can no longer overlap month ends due to the different rules for each month of the new scheme.
- The online claim form will require the employer to report hours worked and the usual hours an employee would be expected to work in a claim period.
- There is now an online facility to correct overclaims in a future return. Underclaims however must be dealt with by phone or webchat.
- The claim for July will be complicated by having to apportion the NI ‘secondary threshold’ between working and non-working days.
- HMRC have confirmed it is OK to defer claiming the employment allowance and claim ErNI under CJRS. A claim for employment allowance can be made against ErNI payable up to and after after the CJRS ends for pay after 31 October. The employer cannot claim both CJRS and EA on the same pay.
- HMRC will not allow time to pay PAYE/NIC which has been recovered under CJRS.
Employees working part-time under the old scheme up to 30 June
Given some workplaces have been given the green light to open in June, if an employer needs some of their furloughed staff to work on a part-time basis up to 30 June they will have to take them off furlough (observing the employment law formalities) and pay their wages for work done, with no government subsidy for the time when the employees are not working.
From the employee’s perspective, going back to work on reduced hours means they may receive less money than they would under the furlough scheme. One option to explore to top up a workers earnings in this situation, may be for them to be paid some of their holiday pay, which should have continued to accrue during furlough.