[Last Updated 26 June 2020]
Coronavirus Job Retention Scheme
The Government has announced the Coronavirus Job Retention Scheme. Under this scheme, HMRC will reimburse your business 80% of furloughed employees wages up to a maximum of £2,500 per month.
This is a temporary scheme that is currently in place from 1 March to 30 June 2020.
Furloughed means that your employees are temporarily laid off but remain on your payroll and what you pay them is subsidised by the government through HMRC.
This measure is designed to help you retain your employees rather than terminating them.
The government has extended the eligibility date.
Employees must be on the payroll on 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.
Employers may opt to continue paying employees who are not eligible for the government support at the business’s own expense.
Employers may also top up an employees pay up to their usual 100%.
Employers may re-employ previous employees that were made redundant or left after 1 March and 19 March, provided that they were on their payroll on 28 February and subject to an RTI submission on or before 28 February 2020.
Critically, the employees must be paid the full amount that was claimed from HMRC.
The minimum period of time that an employee can be furloughed for is 3 weeks.
You will need to designate employees as furloughed and you need to inform the employees themselves. However, normal employment law is still in place and you must check their employment contract as to what you need to do to change their employment status. It might be that you need to talk with your employee to change them to being furloughed, which hopefully you would be doing anyway.
Furloughed employees must NOT be carrying out work for you.
You will also need to inform HMRC which of your employees are furloughed and make a claim for the government’s reimbursement and you will only be able to do this every 3 weeks.
The normal PAYE systems and reporting methods were obviously not set up for this situation, so further guidance will be released on how you will need to go about doing this.
Claims may be backdated to 1 March 2020
Making a claim through the Coronavirus Job Retention Scheme
The online HMRC portal went live on 20 April 2020. You can claim via your own Government Gateway login (you can add PAYE to your services if you hadn’t already) or your accountant/agent can do it on your behalf if there is an online authorisation in place.
Information you’ll need to have at hand before you begin:
- Your Employer PAYE reference number
- Your Employer Accounts Office reference number
- Corporation Tax UTR (if the employer is a company)
- Number of employees being furloughed.
- Dates of furlough
- For each employee, the amount of gross, employERs NICs and employERs auto-enrolment pension contributions (you will need to give the 80% figures that you are actually claiming) for the period you’re claiming for.
(This may involve you working out pro-rated amounts.)
This is so that you can give the total 80% amount that you are claiming for and have a breakdown available, should HMRC check your claim at a later date.
- Bank account details
- Address (the one that is on the bank statements)
- Contact details
From 1 July, there is a separate template for claims involving 100 or more employees.
The service times out if you take too long and then you will have to start again. Your information is not saved. If you have to make corrections, you may also have to start again.
(There are roughly 20 screens to go through but most of the screens only have one question on them. )
There is a declaration that you agree to by submitting your claim. Expect HMRC to check claims against previous RTI submissions and to inspect some claims in more detail. Dishonest claims are fraudulent and will need to be repaid to HMRC.
You will have until 31 July 2020 to make claims for periods up to 30 June 2020. Claims for July onwards can be made to HMRC from 1 July.
Changes to the Coronavirus Job Retention Scheme from 1 July 2020
From 1 July, employers can bring back furloughed employees and still claim the CJRS grant for the hours not worked. Previously, furloughed employees could not work at all.
From 1 August 2020, the level of grant will be tapered down.
- For August, 80% of the wages will be paid (up to a £2,500 cap) for the hours that employee is furloughed for. The employer will have to pay employERs NICs and pension contributions for the furloughed hours)
- For September, 70% of the wages will be paid (up to a £2,187.50 cap) for the hours that employee is furloughed for. The employer will have to pay employERs NICs and pension contributions for the furloughed hours) and top up the wages to ensure employees still receive 80% of their wages (up to a £2,500 cap) for the time they are furloughed.
- For October, 60% of the wages will be paid (up to a £1,875 cap) for the hours that employee is furloughed for. The employer will have to pay employERs NICs and pension contributions for the furloughed hours) and top up the wages to ensure employees still receive 80% of their wages (up to a £2,500 cap) for the time they are furloughed.
Employers can still top up to 100% of the employees wages for the hours not worked.
The wage cap is proportional to the hours not worked.
At the end of the Coronavirus Job Retention Scheme
When the Coronavirus Job Retention scheme ends on 31 October 2020, employers must decide if the employees can return to their jobs. It might be that the business is no longer viable or needs to operate on a smaller scale. If the employee(s) cannot return, then termination or redundancy may be necessary.
The Coronavirus Job Retention Scheme is not to be confused with Statutory Sick Pay. Although employees who become sick or are on long-term sick leave or who are shielding may be furloughed. You cannot claim furlough and the SSP rebate for the same employee for the same period of time (but claiming for different time periods for the same employee is allowed).
Statutory Sick Pay
Medical evidence is not legally required for the first 7 days of sickness. Do use your discretion regarding the need for evidence for a period of sickness where your employee is advised to self-isolate.
Beyond 7 days of sickness, you may request an isolation note from your employee. This may be emailed to you.
SSP will be payable from day 1, as opposed to day 4. When the government passes the necessary legislation, it will apply retrospectively from 13 March.
SSP should be paid to eligible employees through payroll as usual. The statutory sick pay is £94.25 per week but their contractual sick pay may be more, so you should also check to their employment contract.
Employees are entitled to time off work to look after dependants. This may apply to coronavirus. There is no statutory entitlement to pay for this but some employers may offer this.
You may an employee who is in a “high risk” category, and therefore does not want to go into the workplace because they are afraid of catching coronavirus. You may be able to implement further measures in your workplace to address their concerns. However, it may not be possible or the employee still does not want to go in and although you do not have to, you may agree some holiday time or unpaid leave.
Where at all possible, it is sensible to agree a working from home arrangement.
Since things are changing on a daily, if not hourly, basis, some of the above may change, be superseded or clarified in the future.
Please double-check any of the above before acting on them.