< Go Back ARCHIVE: July to October Employer Support Posted: Nov 12, 2020 PREVIOUS UPDATES NO LONGER APPLICABLE CJRS UPDATE 23/06/2020 - Furlough from 1 July 2020 Which of my employees are eligible for furlough from 1 July 2020? From 1 July, only employees that you have successfully claimed a previous grant for will be eligible for further grants under the scheme. This means they must have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June. The last day an employee could have started furlough for the first time was 10 June 2020.
Employers will have until 31 July to make any claims for claim periods up to 30 June.
The only exceptions to this is if your employee has returned from maternity, shared parental, adoption, paternity or parental bereavement leave after 10 June.
More detailed on employee eligibility can be found at https://www.gov.uk/guidance/check-which-employees-you-can-put-on-furlough-to-use-the-coronavirus-job-retention-scheme .
How much can I continue to claim?
GROSS PAY - This will not change for for periods ending on or before 31 August 2020. You can claim a grant for 80% of the gross earnings your claim is based on.
For periods starting on or after 1 September 2020, you will only be able to claim 70% of the gross earnings your claim is based on.
For periods starting on or after 1 October 2020, you will only be able to claim 60% of the gross earnings your claim is based on.
EMPLOYERS NI - For periods ending on or before 31 July, you can claim for Class 1 employer NICs you’ve paid on the grant for your employee’s wages.
For periods starting on or after 1 August you will not be able to claim a grant towards the employer Class 1NICs you’ve paid on the grant for your employees’ wages.
EMPLOYERS PENSION CONTRIBUTIONS - You’ll still need to pay pension contributions on behalf of your furloughed employees. Until 1 August 2020 you can claim for these up to the level of the mandatory employer contribution, even if it’s not an auto-enrolment pension.
For periods starting on or after 1 August you will not be able to claim a grant towards the employer pension contributions you’ve paid on the grant for your employees’ wages.
Can I now part-time furlough?
From 1 July, you can bring back your employees for full or part of the payroll period. For example, if your employee works 5 days a week, you can bring them back to work for 2, and furlough for 3. If the employee is needed more the week after, they can be furloughed for only 2 days, and work for the other 3.
How much can I claim when using the part-time/flexible furlough scheme?
There are lots of examples at 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#example-precalc1 . The main aspect is that you work out the gross pay/NI/Pension on only the furlough proportion of the pay period. You will need to work out how many hours/days the employee should have worked in the period and how many they actually worked. The minimum furlough amount then needs pro-rating to the amount of hours/days on furlough.
Documentation
We advise that you issue, and agree, a revised furlough agreement. This should state the time the employee will be required to work, and the time the employee will be furloughed. However, it may be tricky if working time changes period on period, and therefore it may be worded as hours worked will be variable until a certain date.
Record keeping requirements You must keep a copy of all records for 6 years, including:
the amount claimed and claim period for each employee the claim reference number for your records your calculations in case HMRC need more information about your claim usual hours worked, including any calculations that were required, for employees you flexibly furloughed actual hours worked for employees you flexibly furloughed (Updated as of 07/04/2020, 18:56. Few minor updates and extra step in action plan) (Updated as of 16/04/2020, 11:04) CJRS UPDATE 01/06/2020 The chancellor made several announcements relating to CJRS on Friday 29th May 2020. Here are the main points to take from his announcement, with further details to be announced by HMRC.From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week.
The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June.
This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June. Find out more information on how the Coronavirus Job Retention Scheme is changing .
Timeframe June and July: The government will pay 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: 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: 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: 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. More details To enable the introduction of part time furloughing, and support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. The scheme will close to new entrants on 30 June, with the last three-week furloughs before that point commencing on 10 June. From 1 July, employers will be able to agree any working arrangements with previously furloughed employees. When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns. CJRS UPDATE 01/06/2020 1. We are pleased with how the scheme is operating so far. We have managed to process lots of claims on employer's behalves and assisted where they submit their own. If we have submitted your previous claim, please get in touch when you are ready to make a further claim. 2. Holidays - We have received a few queries regarding holidays, in particular making staff take them. This is more of a HR matter and clients shouldseek advice from an industry expert. Or see, https://www.gov.uk/guidance/holiday-entitlement-and-pay-during-coronavirus-covid-19#taking-holiday . 3. Please note that if you are making your own furlough calculations, be careful with regards to the employment allowance. SSP REBATE UPDATE 29/05/2020 1. The online portal to reclaim COVID-19 related sick pay has gone live. Employer's can claim up to 2 weeks of COVID-19 related SSP per employee. 2. We have already made SSP claims for several of our clients. If we process your payroll and there is some to be claimed, please get in touch.https://www.gov.uk/guidance/claim-back-statutory-sick-pay-paid-to-employees-due-to-coronavirus-covid-19
1. Coronavirus Job Retention Scheme UPDATE 15/04/2020: New Starters (Joined after 28th Feb 2020) On the face of it, it looked as though the government are helping out those new starters, by making them eligible if they were on the payroll before 19th March. This was publicised by the main stream media as helping out the new starters. However, we feel that the devil is in the detail. If you read the government published guidance (below) you will notice the "extension" is restricted to those who had been paid before 19th March. The majority of March starters will not have been paid until towards the end of the month. "You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 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." https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme Expected date online portal will go live We have been advised by HMRC that the online portal that will be used to make the claim, will go live from 20th April 2020. Again, we stress that you will need to be enrolled for the online PAYE service, and it is the employer's responsibility to ensure this is in place.*UPDATE: HMRC HAVE ISSUED FURTHER DETAILED GUIDANCE. SEE https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme#employees-you-can-claim-for *
"The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. We expect the scheme to be up and running by the end of April. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).
Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.
The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020." HMRC.
Towards the bottom of this page you can see a possible action plan that you can take. As important as it is for employers to read through the link above, it can be tough to digest, so we have tried to turn their points into answers of specific questions that you may have, see below:
Can I claim the Coronavirus Job Retention Scheme?
To be able to claim for the CJRS, you must have:
created and started a PAYE payroll scheme on or before 28 February 2020 enrolled for PAYE online - this can take up to 10 days a uk bank account Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
Which of my staff are eligible?
Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including: full-time employees part-time employees employees on agency contracts employees on flexible or zero-hour contracts The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee's wage will be subject to usual income tax and other deductions.
Can we enforce a partial furlough?
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
What do I need to do to furlough an employee?
Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.
I have employees who started after 28 February 2020, can I furlough them for this scheme?
Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
I have a staff member on long term unpaid leave, are they entitled to be furloughed?
Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
I already have an employee on statutory sick pay, do they need to become furloughed instead?
Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.
Employees who are shielding in line with public health guidance can be placed on furlough.
My employee has more than one job, do I furlough them, or is that up to the other employer?
If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.
Can my employee participate in training while furloughed, what do I pay them?
A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.
However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW /NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
My employee is on maternity leave/ contractual adotpion pay/paternity pay/shared parental pay, what can I claim for them?
Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth.
If your employee is eligible for Statutory Maternity Pay (SMP ) or Maternity Allowance, the normal rules apply, and they are entitled to claim up to 39 weeks of statutory pay or allowance.
Employees who qualify for SMP , will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently £148.68 a week, rising to £151.20 a week from April 2020.
If you offer enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the scheme.
The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.
What can I claim? Employers need to make a claim for wage costs through this scheme.
You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
We will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.
Full time and part time employees
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.
Employees with variable pay
If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either: the same month’s earning from the previous year average monthly earnings from the 2019-20 tax year If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.
Other eligible individuals who are not employees
As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE :
office holders (including company directors) salaried members of Limited Liability Partnerships (LLPs ) agency workers (including those employed by umbrella companies) limb (b) workers The guidance below sets out specific considerations for those individuals who are paid via PAYE , but who are not necessarily employees in employment law. Unless explicitly set out below, all other guidance is applicable to these cases, and should be followed.
Office Holders Office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP ), the furlough arrangements should be adopted formally as a decision of the company or LLP .
Company Directors As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.
Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
This also applies to salaried individuals who are directors of their own personal service company (PSC).
Tricky bit: Employer NI and Pension Contributions
All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
You can claim a grant from HMRC to cover wages for a furloughed employee, equal to the lower of 80% of an employee’s regular salary or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
You can choose to provide top-up salary in addition to the grant. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards).
National Living Wage/National Minimum Wage Conditions
Individuals are only entitled to the National Living Wage (NLW )/National Minimum Wage (NMW ) for the hours they are working.
Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW /NMW .
However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW /NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
IMPORTANT BIT: What you will need to make a claim
Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.
To claim, you will need:
your employer PAYE reference numberthe number of employees being furloughed National Insurance Numbers for the employees you want to furlough Names of the employees you want to furlough Payroll/works number for the employees you want to furlough your Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number the claim period (start and end date) amount claimed (per the minimum length of furloughing of 3 consecutive weeks) your bank account number and sort code your contact name your phone number You will need to calculate the amount you are claiming.
VERY IMPORTANT BIT: HMRC will retain the right to retrospectively audit all aspects of your claim.
How do I make the claim?
You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.
What happens after I've claimed?
Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.
You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.
What happens when the government ends the scheme?
When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).
Employees that have been furloughed
Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.
Once the scheme has been closed by the government, HMRC will continue to process remaining claims before terminating the scheme.
Income tax and National Insurance
Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.
Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.
Tax Treatment of the Coronavirus Job Retention Grant
Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
Cairns comments:
Still unsure is what employers do in the meantime. We advise those employers struggling with cashflow to pay their employees consider a 'bridging loan' until they receive the grant. Or consider the Business Interruption Loan Scheme. Prudent employers should seek agreement with their employees on the reduced salary as opposed to just enforcing. A drop in salary could be deemed a breach of employment contract. Although in these difficult circumstances, it is expected most employees will comply. For clients we prepare payroll for: help us out with this. As you can appreciate there will be a lot more work involved for us, let's work together on it. Possible Action Plan 1. Assess : workforce and decide which employees will need to be furloughed, and from what dates from and to. Employees can be furloughed multiple times, but each furlough period must be for a minimum of three weeks.2. Communicate and agree : Employment law (Not advice. We are not regulated to advise on employment law matters. Please consult with your HR/legal team or contact public advisory body e.g. ACAS/FSB): Communicate in writing, with the employee, the current situation and seek written agreement of any temporary reduction in salary. The employee needs to know they are being furloughed (temporary laid off, so look into employment contracts) and that they will be receiving a reduced salary (if not topped up). Templates can easily be found via Google, e.g. https://www.makeuk.org/news-and-events/news/2020/03/25/covid-19-furlough-letter-to-employee . 3. Calculate : Calculate how much you are going to pay your furloughed staff (gross). Relay this figure to your payroll provider (if applicable) for them to process. 4. Track : As you pay your staff, track how much of the pay applies to the Coronavirus Job Retention Scheme grants. This will speed up the reclaim when the portal goes live. Be careful if topping up the salary, as the Employer National Insurance and Employer Pension Contributions on the extra 20% will not be eligible for reclaim. Same considerations needed for those employer's who pay over £2.5K p/m and/or contribute more than the minimum for auto enrolment. 5. PAYE Online : Ensure that you are registered for PAYE online . Note if we are your accountants, there is a chance you are already registered for this, especially if we registered you for PAYE. Get in touch. Likewise, register through the link where it says "PAYE online" above. 6. Stay up to date : Keep up to date with the latest business news announcements via TV and online, also keep an eye out on here and via our emails. 7. Project cash flow : We anticipate that employer's will not receive the grants until the start of May at the earliest. So plan ahead the next 3-6 months, with a focus on the next month or so. If it looks like you need funding until the grants come in, consider applying for Coronavirus Business Interruption Loan Scheme funding. Also, when projecting further into the future, when the grant scheme runs out, be sure to factor in payroll costs before any cash inflows are generated. Usually, work will start a month or so before you start to receive debtor payments. 8. Stay in touch : We understand that as a small business you may be feeling under a lot of pressure and may be worried about the short-term future of your business. Likewise, your furloughed employees will be worried. Keep them reassured with regular communication.* What is a furloughed worker?
We understand that a furloughed workers are “workforce who remain on payroll but are temporarily not working during the coronavirus outbreak” per GOV.UK news story .
It is noted that employers will need to notify employees of this change in employment status to furloughed, but that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
https://www.accountancydaily.co/government-pay-80-salary-furloughed-workers