Coronavirus News: The Job Retention Scheme
Coronavirus Job Retention Scheme [CJRS]- How will it operate?
This new scheme started from 1st March 2020 as was up and running for claims by 30th April. According to current information provided by the Government, the scheme is structured in the following way:
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The scheme allows employers to claim for 80% of the monthly wages of employees who have been placed on Furlough Leave during the Coronavirus crisis. It was originally set-up for a period of 3 months, but it has been extended to the end of October 2020.
What is Furlough Leave?
- Employees must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
- Any UK business with employees can apply, including businesses, charities, recruitment agencies (with agency workers paid through PAYE) and public authorities.
- The types of employee contracts considered under the scheme include:
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full time employees
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part-time employees
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employees on agency contracts
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employees on flexible or zero-hour contracts
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The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
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When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
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To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
Coronavirus Job Retention Scheme - How do employers make a claim?
- Employers need to make a claim for wage costs through the scheme via HMRC.
- Employers will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
- At a minimum, employers must pay their employee 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.
- Employers can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable. Employees placed on Furlough Leave are not entitled to work.
- Once HMRC has received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
- The employer must pay the employee all the grant received from HMRC for their gross pay.
- Wages of furloughed employees will be subject to Income Tax and National Insurance as usual.
- Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes
We're here to help.
Please contact one of our employment team members. We're here to support you with employment advice at this time.
You can also complete our online enquiry form.
At Lawson-West, we provide a national employment service.
Useful Links:
For more detailed information about the Coronavirus Job Retention Scheme, please see the Government's full guidance announcement document here [26th March]
Institute of Chartered Accountants England & Wales - see comments
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