The Government’s Coronavirus Job Retention Scheme (CJRS) has played a vital job in reducing unemployment by helping around 1.14 million businesses to furlough more than 9 million workers.
However, with the scheme ending on 31 October 2020, employers need to be aware of a number of key changes in the next week that they need to prepare for now:
Knowing what the impact of the changes to the Scheme will have on the finances of a business is crucial to determine whether redundancies might be needed.
Need to act now:
31 July 2020 – You must submit your CJRS claim for periods ending on or before 30 June 2020. This is the last date you can make these claims. Employers need to have claimed at any point on or before 31 July to be able to claim for future months. Don’t miss the chance to claim this grant.
We are now approaching the end of the first month during which employers need to account for flexible furlough, where some staff have been allowed to return to work on reduced hours. If employers want to receive payment of the grant for July before the 31 July, they need to complete their application as soon as possible.
1 August 2020 – The CJRS will no longer pay for employers’ National Insurance (NI) and employers pensions contributions for furloughed employees. Employers have to make these payments from their own resources after this date.
Looking further ahead:
1 September 2020 – Employers will have to start contributing to the wages of furloughed employees. Grants will be for 70 per cent of usual wages in September, but furloughed employees will continue to be entitled to receive at least 80 per cent of their usual wages and so employers are expected to make up the difference from their own resources.
1 October 2020 – Government grants will be for just 60 per cent of usual wages in October, but furloughed employees will continue to be entitled to receive at least 80 per cent of their usual wages and so employers will need to increase their contributions again to meet the criteria of the scheme. This is the final month of the scheme.
Employers must correct their payroll processes accordingly and ensure they submit their claims accurately as HMRC is to be granted new powers that will allow it to reclaim any erroneous amounts.
They will also be allowed to charge penalties on top of between 50 and 100 per cent of the original claim, whether the error was accidental or deliberate.
Under these new powers, businesses will have up to 90 days – either from when the amount was claimed or when the 2020 Finance Bill is given Royal Assent (whichever is the later) – to correct existing claims and avoid a penalty.
If employers have questions about employment rights and working arrangements related to the CJRS they should seek professional advice. To find out how we can help, please contact our Head of Employment David Scott by calling 01904 528223 or emailing email@example.com