uncertain and challenging times.
coronavirus job retention scheme
UPDATED 2 November 2020
NOTE – THIS SCHEME HAS NOW BEEN EXTENDED SEE – CORONAVIRUS JOB RETENTION SCHEME EXTENDED
Coronavirus Job Retention Scheme (CJRS)
On 20 March 2020 the government announced the introduction of the Coronavirus Job Retention Scheme (CJRS) to support businesses during the Covid 19 pandemic. The aim of CJRS is to help employers whose operations have been affected by the coronavirus (Covid 19) to retain their employees and protect the UK economy.
The CJRS has been extended to the 31 October 2020; on the 29 May the government announced a change to the rules to allow employers, as from 1 July 2020, to bring back to work employees that have previously been furloughed whilst still being able to claim under the CJRS for their normal hours not worked. Employers must pay employees 100% of wages for the time worked and then can claim under the CJRS for those hours not worked at the 80% rate (subject to cap). Full details can be seen in the government’s press release and HMRC factsheet.
The CJRS closed to new entrants from 30 June; from this point onwards employers can only furlough employees who have been furloughed for a full 3 week period up to the 30 June; this means the final date an employer could furlough an employee for the first time was the 10 June.
The government also announced that as from 1 August employers will be required to start contributing to the cost of the furloughed employees as follows:
- as from 1 August 2020 employers will have to pay for the employer pension and national insurance contributions (for the average claim this represents 5% of the gross employment costs);
- from 1 September 2020 employers will also be required to contribute 10% of the furloughed salary, with the state paying 70%;
- from 1 October 2020 the employer contribution will increase to 20% of the furloughed salary, with the state paying 60%.
The CJRS will end on the 31 October 2020.
A summary of the key CJRS points are:
- To be eligible employees must have been on the PAYE payroll on or before 19 March 2020;
- It applies to any type of contract including flexible or zero hour contracts and agency contracts;
- An employer can claim 80% of an employees regular wage up to £2,500 PLUS associated Employer NI and minimum automatic enrolment employer pension contributions on the subsidised wage. The ‘regular wage’ includes salary, past overtime, fees and compulsory commission payments. Other payments such as discretionary commission and bonus (including tips) should not be included. An employer can choose to top up the pay but is not obliged to do so. As from 1 August employers are required to contribute as explained above;
- If employees are on sick leave or self isolating they should get SSP. If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so. In these cases employees should no longer receive sick pay and would be classified as a furloughed employee;
- Employers may furlough employees who are being shielded or unable to work because they have caring responsibilities resulting from COVID -19 (e.g they need to look after their children);
- A furloughed worker can take part in volunteer work or training as long as the work does not provide a service or generate revenue on behalf of the employer. If they are required to carrying out training whilst furloughed then they should be paid at least NLW/NMW for time spent training. As from 1 July employees can return to work part-time as explained above;
- Employees can start a new job when on furlough, if the contract allows but, even if the contract is silent then it appears there is nothing to prevent the employer from consenting to this;
- Employees can be furloughed multiple times for periods of no less than 3 weeks. As from the 1 July 2020 employees can be furloughed for any amount of time and any work pattern provided they have been previously furloughed for at least 3 consecutive weeks up to the 30 June 2020;
- There must be a written agreement between the employer and employee to confirm the employee agrees to being furloughed. Employers must keep a record of the written notification for 5 years.
- If employers wish to agree a flexible furlough arrangement with employees then this is a further variation and must be in writing and the employee must consent to the change.
How to make a claim
The HMRC portal is open and a link to the portal is in the Guidance
HMRC has issued a helpful step by step guide for employers on how to claim under the CRJS – see Step by Step Guide
How to calculate the 80% wages
There is a separate guide on how to calculate the 80% of wages that can be claimed under the Scheme including details of which specific payments may or may not be taken into account – see Guide .
Holiday whilst furloughed
The government guidance confirms that annual leave continues to accrue during the furlough period and that workers are entitled to take leave during this time and it is paid at their normal holiday pay rate. This means they are paid at full pay even if they are on reduced furloughed pay and the employer will have to ‘top up’ their salary or give the employee a day in lieu.
Employers can require workers to take holiday provided they give the required notice periods, which is double the length of the holiday they require the employee to take, for example, if an employers requires an employee to take 1 weeks annual leave then it must give no less than 2 weeks notice. However the guidance does encourage employers to engage with their workforce and to consider whether any restrictions the worker is under would prevent them from resting, relaxing and enjoying leisure time.
If you need advice in respect of the CJRS or any other employment matter then please do contact Paula Stuart on 07887 998799 or Stuart Snelson on 07715 110425 and they can advise you and guide you through the process.
- Government Guidance on the Coronavirus Job Retention Scheme
- ACAS Coronavirus advice for employers and employees
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The Employment Team
Stuart Snelson Partner
Employment 01908 689318Stuart is Head of the Employment Department and has over 20 years’ experience advising on all aspects of employment and pensions law. His partner led service provides practical and commercially focused advice to a wide range of local, national and international clients on the whole range of work related matters.
Paula Stuart Partner
Employment 01908 689345Paula has over 20 years’ experience practising employment law and provides clear and practical advice to all clients in all aspects of employment matters. Paula also delivers bespoke seminars to clients to meet their specific training needs. Recent courses include ‘The Essentials of Employment Law’ and ‘Best Practice when Managing Redundancies’