Coronavirus Job Retention Scheme extended to end of October and transitional amendments
Ending of the Job Retention Scheme on 31st October 2020 and transitional amendments to the Scheme from 1st July 2020
The Chancellor has confirmed that the CJRS will end on 31st October 2020.
The Scheme will continue to run in its current form up to 31st July 2020 i.e. HMRC will reimburse up to 80% pay / £2,500 pcm plus employer’s NI and pension contributions where it is still necessary for employees to remain on furlough full time.
From 1st July, however, the Scheme will allow for employees who have been previously furloughed to return on reduced hours with employers still being able to make a claim in respect of their non-working days. The Chancellor has said that employees can return to work for any amount of time and any shift pattern while still being able to claim CJRS grant for their normal hours not worked, subject to a minimum claim period of one week. Further guidance on how this will work and how employers should calculate claims is due to be published on 12th June.
The aim is to get furloughed employees back to work, on a gradual basis where necessary, as operations are slowly built back up, where it is safe to do so.
The scheme will be closed to new entrants from 30th June. From that point onwards, employers will only be able to furlough employees who have previously been furloughed for a full 3-week period prior to 30th June. This means that the final date by which an employer can furlough an employee for the first time will be 10th June, in order for the current 3-week furlough period to be completed by 30th June.
Employers will have until 31st July to make any claims in respect of the period to 30th June.
From 1st August, HMRC will continue to pay 80% of pay / £2500 but employers will pay all NI and pension contributions.
From 1st September, HMRC will pay 70% pay / £2190 and employers will pay the mandatory 10% top up plus NI and pension contributions (as with the current Scheme, employers can choose to pay 100%, but the minimum requirement will be 80%).
From 1st October, HMRC will pay 60% pay / £1875 and employers will pay the mandatory 20% top up plus NI and pension contributions (as with the current Scheme, employers can choose to pay 100%, but the minimum requirement will be 80%).
This approach clearly fits with the Government’s overall COVID 19 recovery strategy. Employees are still currently being urged to work from home if they can. If they cannot, they should return to work; however, their employer may only be able to provide them with reduced hours.
For employees who are still unable to return to work at all, due to their employer having no work for them, working in a sector where re-opening is still currently restricted, or because they are continuing to self-isolate, the extension of the CJRS provides for them to continue to be paid.
These amendments to the Scheme reflect the Government’s expectation that employers slowly take back responsibility for paying their employees from the tax-payer.
These changes, along with the complexities associated with calculating claims and remaining compliant will mean that businesses must fully assess:
- Potential phased customer activity and the associated staffing levels required from 1st July.
- How to manage un-furloughing workers to maintain optimal operational performance
- How to remunerate employees after 31st July when the CJRS moves to the transitional arrangements if turnover is still low or only gradually increasing
- The costs no longer funded from Government scheme and the potential alternatives e.g. reducing pay, removing benefits, making redundancies
- What new or proposed ways of working have been learned through any continued trading during lockdown, and what staff redeployment or training is needed as a result
A Consultation has been issued on the taxation of coronavirus (COVID-19) support payments. The new measures will give HM Revenue and Customs (HMRC) powers to recover payments to which recipients were not entitled to under the Coronavirus Job Retention Scheme payment or where a Coronavirus Job Retention Scheme payment has not been used to pay employees, make pensions contributions, pay PAYE or National Insurance contributions. HMRC will also be able to charge a penalty in cases of deliberate non-compliance. Further provisions may be included in the final new clause and schedule when tabled.
The overall message, however, continues to be that the Government is providing assistance to employers and their employees. They are urging businesses not to make permanent redundancies if at all possible.
Get in contact
If you have any queries, or would like to discuss your requirements for the next step, please contact:
Nigel Morris, Employment Tax Director, firstname.lastname@example.org, Tel: 07718 340634
Richard Maitland, Employment Tax Partner, Richard.email@example.com, Tel 07711 373584
Stephanie Pote or Colin O’Kane, Senior HR Consultants, HRSolutions@mhllp.co.uk
The above guidance is provided for your information and is our summary of the latest position as we see it. You should seek appropriate legal and technical advice in relation to your own specific circumstances before acting on the above.
Please also note that Government advice is being updated on a daily basis.
If you are concerned about being impacted financially due to the Coronavirus, we are here to support you or if you require more specific advice on your situation and how the COVID-19 pandemic may affect your business. Visit our COVID-19 business advice page to see how we can help.