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25.11.2020

NI Update: Extended Coronavirus Job Retention Scheme

By Nicholas Young

The Coronavirus Job Retention Scheme (CJRS) was first announced by the UK Government on March 20th, 2020. The Scheme was designed to support employers who may have been considering making redundancies following the impact of coronavirus.

The Scheme is open to all employers who operated a PAYE system on or before March 19th, 2020 and have a UK bank account. Whilst public sector employers have been discouraged from making use of the CJRS, they haven’t been explicitly excluded from it.

What is the Coronavirus Job Retention Scheme?

The CJRS came into effect on March 1st, 2020. It was due to end on October 31st, 2020, at which point the Job Support Scheme would replace it. However, due to new and varying restrictions and lockdowns, the CJRS will now run until March 31st, 2021. The Job Support Scheme (JSS) will instead come into effect on April 1st, 2021.

Under the CJRS, an employer can keep an employee but arrange for them not to attend work as usual. This became known as “placing an employee on furlough”. Initially, an employee had to be on furlough for a block of at least three weeks. But, on July 1st, 2020, a flexible-furlough arrangement came into effect. This allowed the employee to return to work on reduced hours and remain on furlough for the hours up to their normal total hours.

Whilst on furlough, the employer pays the employee 80% of their usual average wage up to a cap of £2,500.00. The employer can reclaim this amount from HMRC. On September 1st, 2020, the reclaim amount changed to 70% of wages up to a monthly cap of £2,187.50 – with employers making up the remaining 10%.

This changed again on October 1st, 2020 to 60% of wages up to a monthly cap of £1,875.00 – with employers making up the remaining 20%. Under flexible furlough, the CJRS only applies to designated furlough hours. The employer covers hours worked in the usual course at the usual rate of pay.

With the announcement of the extended CJRS, the Government has started afresh as regards the furlough payments.

Which employers are eligible?

The extended CJRS is open to all UK employers ─ regardless of whether their business is currently open or closed. There’s no rule stating employers must have made use of the CJRS before November 1st, 2020 to be eligible for the extended CJRS.

Which employees can employers claim for?

The extended CJRS applies to employees employed and on payroll before October 30th, 2020. The employer must also have information on their submission to HMRC for a period between March 20th, 2020 and October 30th, 2020.

If an employee let go after September 23rd, 2020 but was still on payroll on September 23rd, 2020, the employer can opt to re-employ that employee and place them onto the extended CJRS.

How much are employees paid and what can be reclaimed?

For the period between November 1st, 2020 to January 31st, 2021, employees receive 80% of their usual wages to a cap of £2,500.00 per month while on furlough. The employer can reclaim this 80% from HMRC. Employers are responsible for paying national insurance contributions and pension contributions. Flexible furlough also remains in place.

The Government will review this in advance of January 31st, 2021. Adjustments to the above figures may be made for February 1st, 2021 onwards.

What can an employee on furlough do?

An employee on furlough cannot perform tasks that make money for the business or provides a service. Employees can take part in training or volunteer work whilst on furlough.

What comes next?

The current Government plan is place is that from April 1st, 2021, when the extended CJRS will end and the new Job Support Scheme (JSS) will take its place.

The Scheme has two aspects:

  • One for businesses which are ‘open’.

A second for businesses which are ‘closed’ by law.

For ‘open’ businesses, they must meet a financial impact test to show how the coronavirus has affected their turnover. If successful, employees can qualify for the JSS if they’re working for at least 20% of their normal working hours. Employers must pay the employees their full salary for the number of hours worked. They must also pay 5% of their salaries for each normal working hour unworked, up to £125.00 per month. The Government will provide the employer with a grant to cover 61.67% of pay for the unworked hours, up to a cap of £1,541.75 per month.

For ‘closed’ businesses, employees will receive 67% of their usual salary, up to a cap of £2,083.33 ─ this amount will be covered by a Government grant. No impact test is necessary for ‘closed’ businesses.

Businesses that close for a reason other than due to legal compliance are not eligible for the ‘closed’ Scheme.

Employers cannot place an employee at risk of redundancy or make them redundant during the period of time they are on the JSS ─ whether ‘open’ or ‘closed’.

As the JSS is on hold, there’s a chance these rules may change before coming into effect.

Need our help?

For further advice on the extended CJRS, speak to an expert now on 01 886 0350 or request a callback here.

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