GOV.UK has provided further guidance on Saturday 4th April on the basis of the amount of claim an employer can make under the Coronavirus Job Retention Scheme (CJRS).
The scheme falls into three main steps when implementing a furlough arrangement:
- AGREE IT – furlough can not be imposed on employees, it is a variation of their terms and conditions of employment for a period of time.
- PAY IT – an employer needs to decide the basis of payment to their furloughed employees. Will you pay their full pay above the amounts that be reclaimed, or limit the amount to the reclaim minimum?
- CLAIM IT – once the HMRC service for making the application grant is open, then you will need to have calculated the grant amount being claimed. This may be different to the amount actually paid to the employee. The inline service to undertake the claim is not due to open until the end of April 2020. Businesses or their 64-8 authorised agents can make the application. Your payroll operator may not be authorised to undertake the actual claim although they may be able to assist with the data.
What is CJRS
If an employer cannot maintain its current workforce because of coronavirus, they can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs upto £2,500 plus Employer NI and the Pension AE base employer contributions on the amount paid.
It is a temporary measure initially set for 3 months from 1st March 2020.
[update from 15 April 2020] Any employer with a UK payroll and a UK bank account will be able to claim, but you must have been on your employer’s PAYE payroll before or on 19 March 2020 and notified to HMRC on an RTI submission on or before 19 March 2020. This means your employer must have made an RTI submission notifying payment in respect of you to HMRC on or before 19 March 2020.
Most organisations will not need to reclaim as their government funding has not been cut and so most employees will continue as normal and not be furloughed.
However, some organisation who undertake both public and private work, the CJRS is available for those who cannot be redeployed.
Businesses in administration
Administrators should only use the scheme if there is a reasonable likelihood of rehiring.
Who is covered and what timing?
Originally it was announced that Employees had to be subject to PAYE employment on or before 28th February 2020. The start of that employment is critical.
On 15th April 2020 this was changed to – Any employer with a UK payroll and a UK bank account will be able to claim, but you must have been on your employer’s PAYE payroll before or on 19 March 2020 and notified to HMRC on an RTI submission on or before 19 March 2020. This means your employer must have made an RTI submission notifying payment in respect of you to HMRC on or before 19 March 2020.
It covers any type of worker subject to PAYE
- full time
- Part time
- Flexible workers
- Zero hour contracts
What about reduced hours
The employer cannot claim grant for payments to employees working reduced hours.
Added clarification of the types of PAYE employment that can be included
[updated 15/4/2020] The following can be furloughed subject to having been reported to HMRC on RTI FPS submission but 19th March 2020 which is different to the former requirement of being under the PAYE scheme at the appropriate time (28th February 2020):
- Individual employees such as Nannies and carers, household staff
- Apprentices who can continue their training, however, ensure that pay meets NMW requirements for the time spent training. The employer is liable for any excess above the CJRS reclaim amount
- Office holders
- Company directors
- Salaried members of LLP
- Agency workers including those employed via an umbrella
- Limb (b) workers
- Enhanced pay (above statuary amounts due) for those on parental leave (SMP, SAP, ShPP, SAP, SPBP)
All of the above can be included in CJRS.
The Cabinet Office has laid out separate guidance for some contingent workers. They do not form part of CJRS.
Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws apply.
To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.
PAYadvice.UK 4/4/2020 updated 16/4/2020