The Coronavirus Job Retention Scheme (CJRS)

We have been keeping you informed of the Government’s responses to the coronavirus pandemic as they have been released. We would love to hear your feedback and whether there is anything more you would like us to do in these strange times. The Government has announced significant support measures to date and in our last update we informed you of some upcoming changes on the CJRS (Coronavirus Job Retention Scheme) and the detailed guidance was released last week

We are now looking at the 14th update by the government on this topic. The guidance can be found at this link. It is reasonably clear to read and understand, so please do take a look.

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

However, we know that you really don’t want to wade through this guidance yourselves and so we have pulled out the pertinent points here for the immediate changes for June and July. We will then update you each month with the changes for August onwards as the parameters change.

Important matters for June 2020

As per our update number 17, the last date for furloughing a new employee was 10 June to allow the minimum 3 weeks period to 30 June. You are no longer able to furlough employees who have not been furloughed already unless they are returning from certain types of statutory leave e.g. maternity leave.

You must prepare a claim which ends on 30 June which includes all pay up to 30 June. So, for instance, if your usual pay date is 21 June you must either add to the June claim for the period 22 June to 30 June or prepare an additional claim for the final period. Of course, do not forget to exclude this period from any July claim you may be making. You have until 31 July to submit claims relating to periods ending on or before 30 June 2020.

Introduction of Flexible Furlough 1 July 2020.

Prior to 1 July 2020, employees on furlough cannot undertake any work for you other than training. From 1 July, you will be able to:

  • claim for employees who have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020
  • flexibly furlough employees – this means you can bring your employees back to work for any amount of time, and any work pattern
  • still be able to claim the furlough grant for the hours your flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.

You will need to agree this in writing with your employee.

For example, a previously full-time eligible employee can return 3 days per week. They will be paid for 3 days at the full rate and be furloughed for 2 days at 80% of their full rate subject to the apportioned £2500 cap.

The minimum furlough period reduces from 3 to 1 week and an employee can be rotated on and off and be flexi furloughed.

The scheme rules change each month between 30 June to 31 October when the scheme ends. So, to facilitate each change after the 1 July, all claims must not cross calendar months so you must prepare a claim ending on the 31 July, 31 August etc. and include all pay for that month. This may mean that further calculations are required where your usual payroll does not end at the month end.  You may need to do two claims per month.

From 1 July the maximum number of employees you can include in any single claim period cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June. e.g if you claimed for 20 employees in April, 40 in May and 30 in June, the maximum you can claim for is 40.

How to calculate a flexi furlough claim

To date, these calculations have not been easy for anything other than a fixed salaried employee. The calculations are about to get even more complicated.

Up to 30 June the furlough pay was based on average pay, from 1 July the furlough claim is based on usual hours. You must work out the usual and furloughed hours. There are 30 different examples in the government guidance.

https://www.gov.uk/government/publications/find-examples-to-help-you-work-out-80-of-your-employees-wages/examples-of-how-to-work-out-80-of-your-employees-wages-national-insurance-contributions-and-pension-contributions#example3

Examples include:

  • Pay period spanning a calendar month
  • How to work out ‘usual’ hours for a fixed contract
  • How to work out ‘usual’ hours for a variable hours contract in the previous tax year
  • How to work out ‘usual’ hours for a variable hours contract for the same period last year
  • How to work out the furloughed hours
  • How to calculate the employer pension contribution for a flexibly furloughed employee

Pay rates

Furlough pay is based on pay rates in the previous tax year. The hours worked for flexible furloughed employee may be at a different rate particularly if the employee is paid minimum wage.

Future changes

  • From 1 August, employers will have to pay employee’s national insurance contributions and pension contributions on furlough pay and can no longer reclaim them through the CJRS. This will need to be apportioned for flexi furloughed employees.
  • From 1 September, HMRC will only reimburse 70% of furlough pay (up to a maximum of £2,190). Employers are required to top-up to at least 80%.
  • From 1 October, the government will only reimburse 60% of furlough pay (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more).
  • The scheme will end on 31 October

We trust that you are all safe and well and we would like to reiterate that we are here to support you. Please do not hesitate to contact us should you wish to discuss anything at all. We are very happy to help you even if just as a sounding board.

With best wishes from all the team at Geens. Stay safe.