Katy Christiansen: Changes to the Coronavirus Job Retention Scheme in July 2020
At the end of May 2020, the Government confirmed that the Coronavirus Job Retention Support Scheme (CJRS), known as furloughing, would be extended to the end of October 2020, with a Phase 2 of the scheme, allowing for more flexibility in workers furloughed but with employers beginning to contribute to the wage bill of those on furlough, beginning on 01 July, 2020.
The deadline for submitting any outstanding claims in relation to Phase 1 of the scheme (01 March – 30 June, 2020) is 31 July, 2020. If your furlough period would normally straddle 01 July, then it will be deemed as ending on 30 June 2020 and then restarted under the new Phase 2 of the scheme on 01 July. Two separate claims will be needed in such a scenario and furlough days up to 30 June 2020 must be included in the June claim.
Any claims for employees who are on the CJRS scheme from 01 July can only be done from 01 July. Claims for furlough periods completed up to 30 June should be submitted before any claims made in respect of periods from 01 July, 2020 because HMRC will validate the number of employees that can be claimed for. This must not exceed the highest number of employees that were in any claim up to and including 30 June, 2020, other than exceptions for those returning from parental leave, TUPE transfers or PAYE scheme reorganisations. There will be a facility to adjust the claim numbers to accommodate such employees.
In addition, as the rules around what employers can claim for from August to October change it means that claims must be made for the specific period and can’t overlap into a different month.
The scheme will close on 31 October, 2020.
From 01 July, employers can bring previously furloughed employees back to work, for any number of hours or shift pattern, as long as they have completed a full three week period of furlough between 01 March and 30 June 2020.
To calculate an employee’s furloughed hours, if they have worked during the claim period then you would deduct the actual hours worked from the usual hours. Employers will be expected to report the worked hours and the usual hours in the CJRS claims portal and an updated claim template will be provided by HMRC for those with more than 100 employees being claimed via the upload functionality.
This gives a flexible approach to employers in allowing employees to come back to work in anticipation of business picking up as lockdown eases.
However, National Minimum Wage will be an important consideration from 01 July for any employees who are working as well as being furloughed for part of the pay period. They must be paid national minimum wage (NMW) for each hour of work and training. Care must be taken for apprentices in particular.
Tapering of relief
From July through to October 2020 there will be changes to the support provided to employers via the furlough grant. Employers, should they wish, still have the option to top up employee wages but will not receive a grant to cover the ‘top up’ cost.
The below table summarises what will be covered from July to August for both employees and employers:
If you decided to bring back a previously furloughed employee on a flexible basis, you must discuss and agree this with the employee and keep all written agreements for a minimum of five years.
From 01 July, 2020, there is no minimum period of furlough and you can enter into new flexible arrangement with your employees for any number of times.
When your employee is on furlough
The rules employers must adhere to when your employees are on furlough remain the same as Phase 1. You cannot ask your employee to carry out any work on behalf of the business. Your employees can take part in training, volunteering and can work for another employer while on furlough leave.
Employees who are returning from parental leave (maternity, paternity, adoption, shared parental or parental bereavement)
Employees returning from parental leave after 10 June, 2020, will qualify for the phase 2 furlough scheme as long as the employer has previously furloughed employees within the business as part of Phase 1 of the scheme. The employees must however meet the criteria of the scheme which means they must have been employed and processed through your payroll on or before 19 March, 2020.
The rules for what regular payments are used when calculating the 80 per cent furlough gross pay has remained the same as Phase 1 and there has been more emphasis detailed in HMRC’s guidance to state the entirety of the grant should be used and paid to the employee as money. No part of the grant should be netted of to cover items such as benefits or salary exchange. If benefits are provided these should be provided over and above any furlough calculation.
If a furloughed employee is asked to return to work on a flexible basis then a calculation will need to be carried out to determine the employee’s ‘usual hours’ and records kept of the actual hours carried out. As per Phase 1 all calculations will refer to calendar days, which includes non-working days.