The government announced an extension to the Coronavirus Job Retention Scheme (CJRS) at the beginning of the month. Now that the guidance has been published, here’s what you need to know.
What is CJRS?
It is also known as the furlough scheme and it is the government scheme to help protect jobs during the ongoing coronavirus pandemic.
How long has it been extended?
The furlough scheme extension started on 1st November 2020 and is now to be extended to 31st March 2021.
To qualify employees must have been employed and on the employer’s PAYE payroll on 30 October – as reported to HMRC by a Real Time Information (RTI) submission – on or before the 30 October 2020.
If an employer had made anyone redundant after 23rd September, they can be re-employed and claimed for under the new scheme as long as they were included on a PAYE RTI submission to HMRC between 20 March 2020 and 23rd September 2020 showing that they had been paid.
What are the criteria for claiming under the scheme?
Employers don’t need to have used the previous two furlough schemes to use it this time round. They can make a claim whether their business is open or closed. In order to claim the payment, the furlough or flexible furlough must be for a minimum period of 7 consecutive days.
How much is available to employees?
The government will pay 80% of an employee’s salary up to a maximum of £2,500 per month. This is in relation to hours not worked.
However, an employer can also flexibly furlough an employee. This means that they can agree with an employee to use the furlough scheme for part of their work and for the employee to work part time. In this situation, the cap on payments from the scheme is adjusted proportionately.
The employer will need to pay their employees’ tax and National Insurance for any hours not worked.
What else do I need to know about my employees’ rights under the scheme?
The agreement between employer and employee to use the furlough scheme must be in writing. All employee’s rights are protected while on furlough e.g. entitlement to SSP and holiday pay.
Remember that employees cannot work for an employer while they are furloughed. The rules allow employees to work for other employers, but employees need to check that their employment contracts permit this.
If employees must shield in line with public health guidance or have caring responsibilities resulting from coronavirus, including those that need to look after children, then they can be furloughed under the scheme.
How are the payments calculated?
If an employee was eligible for the previous CJRS schemes, in other words, who were on the payroll on 19 March 2020 and is still employed, the calculations will remain as before. Calculation rules for employees who commenced employment between April 2020 and 30 October 2020 will be based on earnings and hours worked during the period from commencement of employment to the end of the last pay period prior to 30 October if they are on fixed pay. For employees on variable pay, the average amounts earned after March 2020 up to the start of the furlough provides the basis of the calculation.
When must I make the claim?
Claims are made on a calendar month basis regardless of the employers pay period and must be made by the 14th day after the end of the calendar month. Therefore, claims for November pay must be submitted to HMRC by 14th December. This is a tighter deadline than in the past, so you must make sure all information is available to prepare the claim on time. make sure your payroll staff/contractors are aware.
What else do I need to know?
HMRC will be publishing the names and company and/or LLP registration numbers of all employers who use the new CJRS scheme. This list will be in the public domain (presumably to try to prevent fraud).
Please also bear in mind that single directors of companies who take a minimum salary with most of their income coming from dividends are likely to be able to be furloughed under the scheme.
Please contact your accountant for further information, especially if you have specific enquires about the calculations.
The full guidance can be found here: https://www.gov.uk/government/publications/extension-to-the-coronavirus-job-retention-scheme/extension-of-the-coronavirus-job-retention-scheme
While we make every effort to make sure this guide is accurate and up to date, you should take professional advice before acting on the information provided here. If you contact us, we will be happy to help. Beans cannot take responsibility for actions taken and losses incurred as a result of actions taken or not taken based on the information provided here.