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The Coronavirus Job Retention Scheme is changing

The Government has made changes to the Coronavirus Job Retention Scheme and the latest phase of the Scheme rolled out on 1 July.  Here we explain what that means for employers.

Updated 6 August 2020

 

What's new on 6 August 2020?

  • More details have been released about the Job Retention Bonus.  See relevant section below.

 

Background

The Coronavirus Job Retention Scheme has helped employers retain staff during the pandemic via a Government grant which covers 80% of the wages for employees not working, up to £2,500 a month.

The Scheme closed to new entrants on 30 June and employers had until 31 July to make any claims in respect of the period to 30 June.

From 1 July, employers could bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. From this date, only employees that employers had successfully claimed a previous grant for will be eligible for more grants under the scheme. The first time employers were able to make claims for days in July was 1 July 2020.  They could notclaim for periods in July before this point.

From 1 August 2020, the level of Government grant provided through the Scheme is being slowly tapered to reflect people returning to work. See the following timescale.

 

Timeline and tapering of relief

June and July 2020: The Government paid 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.

August 2020: The Government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.

September 2020: The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.

October 2020: The Government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed

 

Agents, like accountants and tax advisers, are still permitted to process claims on a client's behalf.

In his Statement on 8 July, the Chancellor made it clear that he intends to end the Coronavirus Job Retention Scheme (CJRS) in October as planned.

 

Is the Scheme open to your organisation?

The Scheme is open to all UK employers who have successfully claimed the Coronavirus Job Retention Scheme grant for their employees prior to 1 July 2020.  This includes:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme. 

 

The Scheme was applicable to company directors.  They too could be furloughed and still continue to perform their obligations as a statutory director (provided they don’t provide any executive services to their employer).  Salaried individuals who are directors of their own personal service company (PSC) can also benefit from the Scheme. This has helped freelancers, contractors etc who have a limited company. 

To claim for wages under the Coronavirus Job Retention Scheme, see the latest Government guidance (including what you'll need to have to hand) here.

Note: You cannot make more than one claim during a claim period – you should make your claim shortly before or during running payroll. Employers with over 100 employees will need to complete a new spreadsheet template when using the scheme. See here.

 

Job Retention Bonus

In his Summer Statement, Chancellor Rishi Sunak announced that to encourage employers to support those people who have been furloughed, a Job Retention Bonus will be introduced.

The Job Retention Bonus will provide a one-off payment of £1,000 to UK employers for every previously furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn more than £520 a month on average between the beginning of November and the end of January 2021.

Those who were furloughed and had a claim submitted for them after the 10 June (when the CJRS closed to new entrants), because they were returning from paternal leave or time serving as a military reservist will also be eligible for the bonus as long as they meet the other eligibility criteria

Employers will also be eligible for employee transfers protected under TUPE legislation, provided they have been continuously employed and meet the other eligibility criteria and the new employer has also submitted a CJRS claim for that employee

Payments will be made from February 2021.

More details have now been released about the Scheme.  See here and here

 

Can we help?

Our specialist team have been helping employers successfully apply for the Coronavirus Job Retention Scheme grant.  For help and guidance, please do get in touch with your usual Shipleys’ contact one of the team shown on this page.

 

Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary, if you would like advice or further information, please speak to your usual Shipleys contact.

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