Conoravirus Job Retention Scheme
On 31 October 2020, the government announced that the Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough Scheme – will remain open until 2nd December 2020, with employees receiving 80% of their current salary for hours not worked, up to a maximum of £2,500.
Under the initial furlough scheme, the government paid 80% of pay up to £2,500 per month from March to August, which reduced to 70% in September and then 60% in October capped at £1,875 per month. The level of the grant under the extended scheme will mirror levels available under the CJRS in August thereby saving cost for employers of retaining workers.
The extended scheme also operates with the Job Retention Bonus which is a £1,000 one-off taxable payment to employers, for each eligible employee furloughed and kept continuously employed until 31 January 2021.
All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.
Businesses will have flexibility to bring furloughed employees back to work on a part-time basis or furlough them full-time, and will only be asked to cover National Insurance and employer pension contributions, which for the average claim, accounts for just 5% of total employment costs.
The current CJRS applies, however, to be eligible under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020 but they do not need to have been furloughed before. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.
Further, employers can claim for employees on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed.
Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period. For worked hours, employees will be paid by their employer subject to their employment contract. For hours not worked by employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.
The government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.
The Job Support Scheme, which was scheduled to come in on Sunday 1 November, has been postponed until the extended furlough scheme ends.
THE JOB SUPPORT SCHEME
The JSS has been delayed until early December 2020.
There are two Job Support Schemes: –
- The first one is called JSS Closed and was designed for businesses that were legally required to close in high risk sectors and parts of the country due to Health Protection Regulations put in place by the UK government.
- The second one called JSS Open and closely resembles the CJRS, and applies to businesses that remain open, but where employees are working reduced hours. Both schemes mirror each other however most businesses would be affected by JSS Open scheme.
JSS Open is a grant payment that an employer can use to cover 61.67% of employee’s wages for hours not worked, up to a total grant cap of £1,541.75 per month. Employers will also have to contribute 5% of the cost of hours not worked up to £125 per month to each employee. This means that the employee will receive 66.7% of their normal pay for the hours not worked.
Employers can claim if they have: –
- Employees on any type of contract (including zero hours and temporary contracts) who were employed on 23 September 2020.
- The employer made a PAYE Real Time Information (RTI) submission notifying payment to HMRC, any time from 6 April 2019 to 23 September 2020.
- Are working at least 20% of their usual hours across the claim period.
- The employer agreed and implemented a JSS Open temporary working agreement covering at least 7 consecutive calendar days. This means the employer must have confirmed to the employee in writing that they have agreed and been put on a JSS Open temporary working agreement before the temporary working arrangement commences. HMRC will publish a checklist by 6 November to help employers prepare temporary working agreements.
Employers cannot claim for employees who: –
- Were not employed on 23 September 2020 because they were made redundant or stopped working. This applies even if the employer later re-hired the employee.
- Employer cannot claim for an employee who is serving a notice period after 23 September 2020.
Employers must have paid the full amount claimed for an employee’s wages to the employee before each claim is made.
Employers will still have to deduct and pay the taxes and employee National Insurance Contributions (NICs) and pay employer NICs to HMRC on the full amount paid to the employee, including any grant from the scheme. Employer must report these via PAYE Real Time Information (RTI) to HMRC on or before the contractual pay date.
Pension contributions in accordance with the applicable pension scheme terms, and Student Loan deductions and Apprenticeship Levy must also be paid if applicable.
Employees still have the same rights including statutory sick pay, maternity and other parental rights, rights against unfair dismissal and redundancy payment. Employees on JSS Open temporary working arrangement will continue to accrue leave as per their employ.
Tolu Oduyemi, solicitor