Update to Job Rentention scheme June 2020

While the Government is currently paying 80% of workers’ salaries up to £2500 a month for some 8.4 million workers under its furlough scheme, it has made clear that it cannot continue to provide this unprecedented level of support for an indefinite period. Now the Chancellor has announced that, although the Coronavirus Job Retention Scheme (CJRS) is set to run until October, employers will be asked to begin to pay a share of the wages. In August, they will be expected to meet National Insurance (NI) and pension contributions while the Government continues to meet the 80% of salaries. For the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed. In September, the Government percentage will be reduced to 70% (a cap of £2187.50) and in October to 60% (a cap of £1875) with employers expected to make up the 10% and then 20% difference. Employers will also be expected to pay 100% of the NI and pension contributions. For these two months, and for the average claim, this represents 14% and 23% of the gross employment costs the employer would have incurred had the employee not been furloughed. In addition, furloughed staff will be able to work part-time in their old roles from 1 July (a month earlier than previously announced) with individual firms deciding the hours their employees will work on their return and their shift patterns. The reference here to the hours the employee does or does not work relates to the fact that employers can bring furloughed employees back to work on a part time basis from July 2020 under the flexible furlough scheme and still claim from the scheme for the days the employee would usually work but has not worked, the maximums are set out above. Employers are not required to bring furloughed employees back part-time. They can keep employees on ‘full’ furlough (provided they had completed three weeks of furlough prior to 1 July 2020) but must pay the increased employer contributions. As furloughed employees can return to work on a part-time basis from 1 July, the new caps will be proportional to the hours not worked.   Over a third of those using the scheme said they would bring the majority of their furloughed workers back part-time, when the scheme allowed it. Fewer than one in 10 said they would not bring anyone back part-time. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked, HM Revenue and Customs (HMRC) has confirmed. Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline and it will not hesitate to take action against those found to be abusing the scheme.   As furloughed employees can return to work on a part-time basis from 1 July, the new caps will be proportional to the hours not worked.   AS Taxation further comment:  The calculation for the job retention scheme after July will get more complicated if employers have part time staff it is recommended that detailed records are kept of old working hours and the new part time hours.  It is likely we will get queries by employees if the wages are not what is expected for the month.  HMRC have said that records backing up furlough claims must be detailed and available if required for a more detailed look into a claim.   NOTE:  Employers intending to use Coronavirus Job Retention Scheme (CJRS) from 1 July 2020, only employees who have been furloughed for a minimum of three weeks on or before 30 June 2020 will be eligible for the scheme after that point so if any employees are to be furloughed they should be added from the 1 June to fulfil the obligation.   https://www.gov.uk/government/publications/employer-bulletin-june-2020

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