Back in April, The UK Chancellor Rishi Sunak announced the CJRS(Coronavirus Job Retention Scheme) to aid SMBs during the ongoing pandemic. The scheme allows small business owners to retain their employees by furloughing them, in which case, the UK Government would cover 80% of their employee’s wages plus any employer National Insurance and pension contributions.
The CJRS has been a lifeline for small businesses as well as their employees who otherwise would have lost their jobs during these uncertain times. More than 1.1 million employees have been furloughed under the scheme with total grants of around £23 billion (Source: accountingweb). The scheme will further continue to support SMBs until the end of October. However, on May 29th, Rishi Sunak announced many changes to the scheme that came in effect from 1st July onwards.
In this post, we’ve compiled some of the key changes that came in effect alongside the CJRS v2.
CJRS Key Changes:
The new changes that have been implemented aim towards restructuring the benefits of the scheme while bringing the furloughed staff back to work. Being touted as the CJRS version 2.0, the new scheme allows employers to bring back their furloughed staff to work, starting from July 1st onwards. This means that employers can claim CJRS grants for a portion of their employee’s salary (for the hours not worked).
However, from August 1st, 2020, the amount of grant the government is offering will reduce. For the month of June, there will be no changes in the grant.
Here’s a table showing the Government’s contribution, required employer contribution and the amount an employee receives where the employee is furloughed 100% of the time.
|Government contribution: employer NICs and pension contributions||Yes||No||No||No|
|Government contribution: wages||80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875|
|Employer contribution: employer NICs and pension contributions||No||Yes||Yes||Yes|
|Employer contribution: wages||10% up to £312.50||20% up to £625|
|Employee receives||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month|
Note: Wage caps are proportional to the hours an employee is furloughed.
Accountingweb.co.uk also conducted a webinar on the CJRS 2.0 where they answered FAQs around the new rules introduced. Here’s an overview of the webinar:
How is the furlough claim calculated for variable hours employees who come back on flexi?
For variable hours employees you look at what hours they worked in that same period last year and you also look at their average working hours over the 2019/20 tax year. You pick whichever gives them the best answer and works in their favour.
If they come back on flexi, you have your usual hours based on what they did previously, and you have the actual hours that they have worked, and the difference is what you furlough.
What is different under CJRS 2.0 is that whatever answer you choose for pay, you’ve got to use the same basis for hours. You can’t say we’ll have corresponding hours and average pay – there has to be a consistent approach to the two bits of the calculation.
If an employee normally works 20 hours per week, and that employee returns for 10 hours a week, does that mean we divide the weekly average furlough pay by half and claim that?
Logic tells you that they’re only working 50% but actually, it depends on the claim period. For example, if that’s a monthly-paid employee and you’re doing a monthly claim, you won’t automatically get the answer you were expecting. I would always suggest you go through HMRC’s steps regardless. A lot of the time it will come out intuitively, but the times when it doesn’t, at least you know you’ve got it right.
What about zero-hours contract employees?
They’re variable hour employees for the purposes of determining usual hours.
How do you treat straddling periods between months under CJRS 2.0?
Because they’re separate months, all the claims have to be separate. The July claims must be between the 1st July and 31st July, which means you can end up having to do lots of little claims to cover a calendar month if you’ve got weekly or four-weekly periods.
We need to see CJRS 2.0 as split into mini-schemes, one for each month.
Can more than one claim a month be made?
Yes! A claim should normally be for a minimum of seven days from 1 July. However, you do get these “orphan” periods as claims can’t cross calendar months from 1 July.
A claim can’t be for less than a week unless it’s for an “orphan” period, which is the end of a month or the beginning of a month.
Are you still able to submit claims up to 14 days in advance under CJRS 2.0 or do you need to wait until the claim period has finished before making a claim?
Yes, you can claim up to 14 days in advance of your payroll, but just make sure that you know those are the final figures. You can wait until the scheme ends to put all your claims in as far as I’m aware, but it all comes down to cashflow.
What are the deadlines for making a claim under CJRS 1.0 and 2.0?
Claims under CJRS 1.0, which ends on 30 June, must be made by 31 July 2020.
As to a deadline for submitting CJRS 2.0 claims, Thornley’s and McGregor’s assumptions are that this is likely to be 30 November 2020 (i.e. one month after CJRS 2.0 finishes) but this is pending confirmation from HMRC.
How do you deal with employees returning from family-related / sick leave?
Under CJRS 2.0 the number of employees that can be claimed for must not exceed the highest number of employees that were in any claim up to and including 30 June 2020.
However, there are exceptions, including employees returning from family-related leave after 10 June, even if you are furloughing them for the first time. Such employees are added to any previous maximum. Calculation of the furlough grant for these employees can be found here.
Note that this exception does not apply to those on sick leave.
What about National Minimum Wage and holiday pay?
Upcraft: We’ve got to make sure that the hours people are working are remunerated at least at the April National Minimum Wage. If you’re working, you’re back to your normal contract, unless you’ve had a contractual change that says your pay is changing.
[On holiday pay] Remember holiday pay is at normal pay, and normal pay changed as a calculation in April. So, where the rate of pay varies, we have to look back over 52 weeks to work out what that normal pay would be, discounting the furlough weeks and discounting holiday weeks. Also, we don’t look back 52 weeks in Northern Ireland because the law hasn’t changed, but we do in Great Britain.
The new reforms also introduce a few changes to the way employers need to make a claim.
- Employers can make their claims until 31st July, for the period before 30th June.
- For claiming after the 30th June period can be made from 1st July only.
- Since the scheme changes every month, the claim period must fall under the same calendar month.
- Employers can make more than one claim in a month, however, each claiming period should be no less than 7 days.
- In no case, the total number of employees an employer can claim for during a particular claim period from 1st July 2020 should exceed the maximum number of employees they had claimed for in any single claim before 30th June 2020. However, an exception can be made if an employee is returning from statutory parental leave after 10th June.
- Employers need to have the data and proof of the exact number of hours their employees have worked during the claim period.