COVID-19 FURTHER UPDATE: THE CORONAVIRUS JOB RETENTION SCHEME (1 June 2020)
2nd June 2020
On Friday 29 May the Chancellor of the Exchequer made a further announcement in relation to the Coronavirus Job Retention Scheme. This is an important announcement and full details can be found here:-
The changes concern how far employers will require to contribute to the wage costs of staff who have been furloughed. The good news for them is that the widely anticipated tapering provisions are in fact more gradual (and therefore more generous to employers in terms of both money and latitude for delaying hard decisions) than had been rumoured.
Here is a summary of the changes:-
• From 1 July (which is one month earlier than previously announced) employers will be able to bring furloughed staff back to work for any amount of time and on any shift pattern. Employers can continue to make a claim under the CJRS for any normal hours not worked by them. When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week. The scope for abuse of these rules is much greater than was the case for the previous rules so it is vitally important that employers control and document rigorously the hours that recalled staff do and do not work;
• To be eligible for the CJRS grant, employers must agree with employees any new flexible work arrangements and confirm that agreement in writing. The Government’s clear concern remains to prevent employers claiming what is effectively a subsidy on wage costs for time their people spend working. This emphasises the need to properly document the arrangements and to maintain accurate records;
• Further guidance on flexible furloughing will be published on Friday 12 June;
• During June and July the Government will continue to pay 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (NIC) and pension contributions for any hours the employee has not worked. As highlighted above, employers will have to pay employees for actual hours worked by them and cannot claim under the CJRS for those hours;
• In August the Government will pay 80% of wages up to a cap of £2,500 but employers will now require to pay the employer’s NIC and pension contributions for the hours the employee does not work (and of course those for which they do). According to the Government, around 40% of employers have not made a claim for employer NIC costs or employer pension contribution costs under the CJRS. It is difficult to understand why, but those employers will be unaffected by the changes in August if their employees’ work patterns do not change;
• In September the Government will only pay 70% of normal working wages up to a cap of £2,187.50 for any hours the employee does not work. Employers will be required to pay employer NIC and pension contributions plus 10% of wages to take them to the current 80%, still subject to the same cap of £2,500;
• In October the Government will only pay 60% of wages up to a cap of £1,875 for any hours the employee does not work. Employers will be required to pay employer NIC and pension contributions and 20% of wages to make up that 80% total, again subject to the £2,500 cap;
• The CJRS will be closed to new entrants from 30 June. From this date onwards, employers will only be able to furlough employees who have already been furloughed for a three week period prior to 30 June. In practical terms this means that the final date by which employers can furlough any individual for the first time will be 10 June. It is therefore critical that employers consider now whether they will need to furlough any more staff so they do not miss the closing date; and
• Finally, the CJRS will close on 31 October 2020.
Please remember that we at WJM are here to help during this exceptionally difficult time, please don't hesitate to get in touch if there is anything you think we can help with.
For any advice in relation to any particular aspects of the above, please contact a member of the Wright, Johnston & Mackenzie Employment Team: Martin Stephen (firstname.lastname@example.org), Liam Entwistle (email@example.com), Andrew Wilson (firstname.lastname@example.org) and John Grant (email@example.com).
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