How will the changes announced in June 20 impact your business?
Changes to the Coronavirus Job Retention Scheme (CJRS) announced in June will see furloughed staff being able to return to work part-time, an end to adding new staff to the scheme from 10/6/20 and the amount of Government support reducing gradually from August 20.
What changes for the CJRS and when?
The CJRS will close to new employees who have not previously been furloughed, from 10th June, and the scheme closes completely at the end of October 20th.
- A system of flexible furlough/ part-time working will come into effect from 1 July, allowing employers to bring back furloughed employees for any amount of time on any shift pattern, while still able to claim a grant in respect of the time not worked when they would normally have worked.
- As and employer you will have to pay employees at their usual rate of pay for any hours they work, and pay the Employer National Insurance Contributions (NICs) and minimum employer automatic enrolment pension contributions that this pay attracts.
- You will need to reach new flexible furlough agreements with any furloughed employees brought back on a part-time basis. Ask an HR adviser or edit the letter you used for furlough leave.
- From 1 August, CJRS grants will cease to cover Employer NICs and pension contributions, with this cost passing to employers. The grant will continue to cover 80% of furloughed employee’s usual wages, up to the cap of £2,500 a month.
When does the CJRS Grant start to reduce?
From September, the value of the grant will fall to 70% of a furloughed employee’s usual wages, capped at £2,187.50 a month. Employers will pay the remaining 10% plus NICs and pension contributions to reach a combined total payment to the employee of 80% of their usual wages, up to a cap of £2,500 a month.
From October the CJRS grant from the Government reduces to 60%, capped at £1,875 a month, with employers paying 20% of a furloughed employee’s usual wages plus NICs and pension contributions to reach the total of 80%, capped at £2,500 a month.
No new entrants to the CJRS from 10 June
The government has announced the closure of the scheme to new entrants from 30 June. After this point, employers will only be able to furlough employees who have been furloughed for three full weeks at any point before 30 June.
This means the last day an employer can furlough an employee for the first time will be Wednesday 10 June.
Also, after 30 June, employers will not be able to claim for more employees in a claim period than the maximum number they have claimed for in any period under the scheme in its current format.
Details of the CJRS after June
Details from HMRC are expected to be announced on 12th June 2020.
What records do you need to keep?
HMRC have announced clearer, updated record-keeping requirements of the scheme.
The written agreement that the furloughed employee will, under the current terms of the scheme, cease all work must be retained until 30 June 2025. Also the agreement must
- State the main terms and conditions
- Be incorporated either expressly or implicitly in the contract of employment – most employers have a separate agreement signed by the employee.
- Be either made or confirmed in writing – get your staff to sign it.
Be aware – Expect an HMRC audit of furlough Grant Claims
It is widely expected that HMRC will audit use of the scheme retrospectively over the coming months and years, with potentially large penalties and possibly prosecution for those found to have acted improperly.
HMRC have opened a whistleblower online portal for individuals to report employers who have acted improperly, especially those who have claimed grants for staff who continued to work for the business.
If you need help to work out what you can claim please call us on 01603 516 304 🙂