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Furloughing staff and the Coronavirus Job Retention Scheme

The Government’s Coronavirus Job Retention Scheme was launched on Monday 20th April, which saw more than 140,000 apply to furlough their staff within the first 30 minutes of it going live.

The scheme has been designed to support employers who have been adversely affected by the COVID-19 pandemic and allow them to access a grant covering 80% of eligible employees’ wage costs up to a cap of £2,500 per worker per month.

When announced on 20th March, the Coronavirus Job Retention Scheme (CJRS) was set to run until end of May, however, the cut-off date has since been extended until the end of October.

The scheme is available to employers who have ‘furloughed’ one or more of their employees. Any company or organisation with a UK payroll can apply but to be eligible employers must have:

  • created and started a PAYE payroll scheme on or before 19th March 2020
  • enrolled for PAYE online
  • a UK bank account

HMRC has said the scheme will close to new entrants from 30th June.

After this point, an employer will only be able to furlough their employees that they have been furloughed for a full three-week period, which must have arisen before 30th June.

This effectively means that the deadline to furlough an employee for the first time will be 10th June, in order for the current three-week furlough period to be completed by 30th June. HMRC also announced that employers will have until 31st July to make any claims in respect of the period to 30 June.

An employer will have to class their employees as ‘furloughed workers’ to be eligible for the job retention scheme. A ‘furloughed worker’ is essentially a non-working employee who is retained on an employer’s payroll, rather than being made redundant. To be classed as ‘furloughed’, the employee must not undertake any work for the employer (including working from home).

Employers will pay their staff through their normal payroll channels. The grant is then claimed by submitting the relevant information to HM Revenue and Customs (HMRC) via an online portal which went live on 20th April. See how to claim under CJRS.

Details of the CJRS can be found within the following HMRC guidance:

  • Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme here 
  • Check if your employer can use the Coronavirus Job Retention Scheme here 
  • A step by step guide for employers here 
  • Guidance on how to claim for wages through the Coronavirus Job Retention Scheme can be found here

HMRC has also provided examples and a calculator, which helps with more basic calculations for employees who are paid the same amount each pay period.

Other key points to note about the CJRS:

  • Employees must have been on the payroll on or before 19th March 2020 and have been notified to HMRC on an RTI submission on or before 19th March 2020.
  • Payment is based on the employee’s last pay period prior to 19th March 2020 – calculations required where employee is on a variable wage.
  • Employees taken on after 19th March 2020 cannot be claimed for.
  • Employees made redundant between the 1st and 19th March 2020 can be claimed for, if re-hired and then furloughed
  • A furloughing period must last for at least three weeks.
  • The employer must designate these employees as furloughed and any furlough agreement between the employer and employee should be documented in writing. Any changes to an employee’s working arrangements is an employment law matter and appropriate advice should be sought.
  • Employers can also claim the associated Employer National Insurance contributions (NIC) and minimum automatic enrolment contributions on the subsidised element of the furloughed worker's wages.

The Government has confirmed company directors can be eligible for the scheme. More about how the CJRS may be applied to directors can be found here.

Special rules apply to businesses which receive public funding, especially nursery schools, which may limit the ability to claim under CJRS.

How we can help

There are several ways in which we may be able to help. It is always important to get good advice and particularly true in turbulent times like now. If you need help please talk to us on 0800 0523 555 or use our online enquiry form. We can offer initial consultations, guidance and support over the phone if you have any concerns about face-to-face meetings.

 

For our latest COVID-19 news and guidance for your business, visit our dedicated Coronavirus Hub.
We will be updating it regularly as we continue to monitor and digest all the latest information

 

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0800 0523 555

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