Coronavirus Job Retention Scheme
STOP PRESS!!
Job Support Scheme has been cancelled before it started; CJRS aka “the furlough scheme” – has now been extended to the end of March 2021. Fact sheet (PDF). Full guidance and examples to be published by HMRC on 10 Nov.
Employers receive the money within 6 working days of making a claim.
It’s back to 80% support from government – same as August.
As in August 2020, employers cannot claim the employer’s National Insurance or pension contributions where applicable.
From January 2021, employers may be required to contribute more. It’s a wait and see.
Claims must be made by day 14 of the following month! This is frankly insane and we hope that HMRC will see sense.
Job Retention Bonus (JRB) scheme has been abandoned and will not be paid in February 2021 as previously announced.
Coronavirus Job Retention Scheme (JRS)
- This is the 80% grant that everyone is asking about. Staff must have been employed under PAYE and paid and reported to HMRC by 30 Oct 2020 to qualify.
- Understand what furloughing means. It’s all about keeping people in a job.
If you have good staff that you want to keep, furloughing is the way to go.- You must tell your staff that you are furloughing them – here’s a template letter or go to ACAS.
Fully-furloughed staff must not provide services or generate revenue for the employer.
Staff can work part-time and be part-furloughed.
- You can furlough some or all of your workers.
- You must pay your employee the lower of 80% of their regular wage or £2,500 per month. You can choose to top up an employee’s salary beyond this but that is voluntary and the top-up won’t be reimbursed.
- Staff retain all their normal employment rights including holiday pay, which will continue to accrue during the period of furlough. Equality laws still apply and employers must take care not to discriminate when selecting staff for furloughing or returning to work.
- You must tell your staff that you are furloughing them – here’s a template letter or go to ACAS.
- For full and part time salaried employees, the grant paid under JRS will be 80%* of the actual salary before tax. Previously furloughed staff continue to have their pay and usual hours calculated in the same way; new employees’ furlough will be based on the last pay on or before 30 Oct.
*This grant may reduce from January onwards.
Sammy normally earns £1000 per month before tax (gross)
Employer’s National Insurance Contribution is £39
Employer’s pension contribution is £15
Sammy must get £800 gross if fully-furloughed.
The employer must still pay the NI and pension contributions.
In this case, the employer can claim £800.00 per month (80% of £1000).
Sammy’s actual take-home (net) pay will depend on their tax code.
- For new employees whose pay varies, including those on zero hours contracts, the 80% is based on their average hours from date of employment up until the day before they were furloughed.
- You should continue to pay your staff. Otherwise you’ll be in breach of contract. So you may have to pay first and then claim it back.
- The November extension is on the same terms as August, i.e. employers only have to pay NI and pension where applicable. The government will cover the full 80% of wages.
- Limited company directors, who are employees of their own companies, are eligible. Whilst fully furloughed, directors must only carry out statutory duties like accounts and payroll – any commercial or revenue-generating activities will fail the JRS requirements. This includes marketing, and hiring and managing subcontractors so don’t do it!
Either you are shutdown, or you are providing services and receiving income. There’s no in-between. If the income isn’t enough, that’s a cashflow problem and you should look at CBILS or BBL.
We expect stringent anti-fraud measures and we warn all business owners that if they abuse the system, they should expect public naming and shaming for what is, after all, illegal profiteering from a national crisis.
HMRC has put in place an online portal for employees and the public to report suspected fraud.
Prosecution and heavy penalties will follow for those who try to rip off the government in this way.
- Gov.uk Coronavirus guidance for employees
- Gov.uk Coronavirus JRS claims – guidance for employers
- HMRC YouTube channel –Coronavirus support
Frequently Asked Questions
How do I get the money to pay my staff?
You must pay your staff upfront and then get reimbursed. HMRC will pay direct into your business bank account.
Will J&K claim for me?
No. We have neither the capacity nor the authority with HMRC to do so for all our clients.
For most of our clients, we provide a filing-only service. This means we can file your normal payroll returns to HMRC, but we don’t have the power to do anything else.
We will of course give you the info needed to make your claim.
What if I can’t afford to pay my staff?
You should seek financial support from your bank e.g. BBL or CBILS.
When do I pay my staff?
Furloughed staff should get their wages on their normal payday. Any changes without their agreement would be a breach of their contract of employment.
Do I have to furlough everyone?
You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake ANY work for you.
If you have some work available, you may choose to furlough part of your workforce while others carry on.
The point of the scheme is to keep people in jobs who would otherwise be made redundant due to the Covid-19 crisis.
How much do I pay?
You must pay employees 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.
How does flexible furloughing work?
Staff must be paid normal wages for the hours worked – National Minimum Wage applies as normal – and can be furloughed for the rest of the week/month.
Can my staff work elsewhere?
Yes they can.
If they already have another job, they can be furloughed from each job.
A furloughed employee can take part in volunteer work, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.
What about holiday pay?
Furloughed staff continue to accrue holiday. If employees take holiday whilst furloughed, this must be paid at their FULL rate, i.e. topped up by the employer to 100% of their normal wage. This includes Bank Holidays.
My husband/wife is on my payroll. Can I furlough them?
Certain companies have added a partner/spouse to their payroll solely in order to benefit from claiming the Employment Allowance. HMRC has shown great interest in businesses where one spouse is considerably less active within the business than the other.
For CJRS we take the view that if the active partner is working, so is the spouse.
If your company was audited by HMRC, you would have to demonstrate that the spouse is a genuine employee, on a commercial wage, playing a part in the day-to-day running of the business.
We have clients – from pubs to beauty salons – that have genuinely lost all their income overnight.
Anyone wanting to take advantage of this national emergency needs to take a good hard look in the mirror.
Together we face an unprecedented situation, one in which 90% of us will do the right things:
- Don’t stockpile loo roll or anything else.
- Check on your vulnerable neighbours.
- Practise social distancing.
- Wash your hands.
- Wear a mask.
- Be kind.
