From 1 July 2020 the Coronavirus Job Retention Scheme (CJRS) is changing to allow more flexibility. HMRC updated their guidance on 12 June 2020 to account for the series of changes that will be introduced.
The scheme which will close on 31 October 2020 is also set to change again from 1 August 2020, with the level of grants reducing each month (more details can be found below).
What periods do claims cover under the revised scheme?
The revised CJRS is being treated as a completely new scheme as of 1 July 2020, with two separate claims required for furlough periods that straddle that date. Furlough periods will therefore need to end on 30 June 2020 and restart on 1 July in accordance with the changes announced. However, claims for furlough periods up to 30 June must be submitted before claims in July under the revised scheme due to the maximum numbers rule (see below).
Claims under the new scheme cannot be made until 1 July and those under the existing scheme must be made by 31 July. Also claims cannot be made more than 14 days before the end date of the claim under both the existing and revised CJRS. Only one claim per PAYE scheme is permitted, including all pay frequencies.
Claims that straddle months
The scheme is being updated at the beginning of each month which is why claims must start and end within the same calendar month. Also claim periods cannot be shorter than a week. However, when six or less days relate to the previous month this rule is exempt. This will be problematic for four weekly payrolls which will require fortnightly claims (two per pay period to align to the calendar month).
Who can be claimed for from 1 July?
Employees can only be included in claims from the 1 July if they have been furloughed for at least 21 days between 1 March to 30 June 2020. This means that employees furloughed for three weeks in May that have since returned to work can still be included in a claim from 1 July.
Furlough periods up to 30 June must last at least 21 days and can be extended by any number of days. However, if an employee returns to work and then starts a new furlough period, this period must be for at least 21 days. If an employee begins a new furlough period after 10 June, a period of at least 21 days whilst furloughed must be completed, before changing to a flexible furlough arrangement. However, if an employer furloughs an employee for less than 21 days up to 30 June without making a CJRS claim for that period, they would then be able to flexibly furlough the employee from 1 July.
The maximum number of employees in a claim
The number of employees included in a claim must not exceed the highest number of employees that were in any claim up to and including 30 June 2020, which will be validated by HMRC.
There are exceptions to this rule when employees have returned from parental leave and were not included in a claim up to 30 June. There are also exemptions for when employees are moved to a new PAYE scheme due to a scheme reorganisation or transferred under the TUPE rules into a business as a result of a change of ownership or a compulsory liquidation since 10 June 2020. These must have been included in a claim under their previous PAYE scheme between 1 March to 30 June 2020. Claim numbers can also be adjusted accordingly to accommodate these employees.
Calculation of usual hours
From 1 July 2020, employees will be able to work and be furloughed during the same pay period, including the same day. In order for employers to take advantage of this flexible arrangement they must calculate the employees’ ‘usual hours’, actual hours and furloughed hours worked. ‘Usual hours’ are contracted hours for salaried employees or calculated using a specific formula for zero hours or variably paid employees and must be round up to the next whole number of hours. Examples can be found on GOV.UK here.
Calculation of furloughed hours
Furloughed hours are calculated by deducting the actual hours worked from the usual hours. Employers will need to report the worked and usual hours in the CJRS claims portal, unless there are 100 or more employees in a claim, in which the details can be submitted via a spreadsheet.
From April 2019, employers in Great Britain were required to show the number of hours worked on payslips if pay varied based on hours worked. This rule will also apply to flexibly furloughed employees from 1 July. Employers may also wish to show furloughed hours for transparency, however this is not a legislative requirement.
£2,500 wage cap
The £2,500 wage cap is still in place for July and August and applies to each employment. Rather than being aggregated, it is paid on a pro-rata basis according to the hours that the employee is furloughed, with the apportionment based on calendar days. The employer’s pension and NIC threshold will also be apportioned. Examples can be found on GOV.UK here.
National minimum wage
It is important to consider the national minimum wage (NMW) from 1 July for all employees who are working part-time, as well as being furloughed. For the hours employees’ work and undertake training they must be paid NMW, and particular care must be taken for apprentices.
Communication with employees
Employers must communicate clearly what is required to be paid through the payroll, in line with the employee’s terms and conditions for the number of hours worked, and the furloughed hours that can be claimed for under the CJRS. The amount that can be claimed may be less than employers expect and less than they will be paying through the payroll.
Grant level changes
As mentioned previously, the level of grant will be reduced each month from 1 August 2020. We have outlined the timescales of these changes to the CJRS below.
The government will pay 80% of wages up to the £2,500 cap, as well as employer NICs and pension contributions for the employees’ furloughed hours. Employers will only be required to pay employees for the hours worked.
The government will pay 80% of wages up to the £2,500 cap for the employees’ furloughed hours. However, employers will be required to pay NICs and pension contributions for the employees’ furloughed hours.
The government will pay 70% of wages capped at £2,187.50 for the employees’ furloughed hours. However, employers will be required to pay NICs and pension contributions and will also need to top up employees’ wages so that they receive 80% of their wages up to a cap of £2,500, for the employees’ furloughed hours.
The government will pay 60% of wages capped at £1,875 for employees’ furloughed hours. Employers will again be required to pay NICs and pension contributions and will need to top up employees’ wages so that they receive 80% of their wages up to a cap of £2,500, for the employees’ furloughed hours.
For further information, contact Owen Kyffin on 01295 270200 or email: Owenk@whitleystimpson.co.uk