What is it?
In an unprecedented move in the history of the British State, the Chancellor Rishi Sunak has unveiled support to businesses to help prevent job losses.
Under the Coronavirus Job Retention Scheme, the Government announced that they will pay a grant to employers from 1 March to cover 80 per cent of employees’ salaries up to a maximum of £2,500 per month. This scheme originally ran until 30 June. It has since been extended until the end of October, with changes effective from 1 July. The two variations in the scheme (pre and post June 30) are outlined in detail below.
HMRC have released an online service to enable employers to claim for their employees’ wages using the Coronavirus Job Retention Scheme.
Who is eligible?
How does the scheme work until 30 June?
How does the scheme work from 1 July?
- On 29 May the Chancellor announced further detail about how the scheme will change to support businesses sending staff back to work.
- The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June. This means that the final date by which an employer can furlough an employee for the first time will be the 10 June, in order for the current three-week furlough period to be completed by 30 June. Employers will have until 31st July to make any claims in respect of the period to 30 June.
- From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.
- From 1 July 2020, employers will be given the flexibility to bring furloughed employees back part time. Employers will decide the hours their employees will work on their return, so that they can decide on the best approach for them. Note that employers will be responsible for paying the employees’ wages while in work.
- Below is a summary of how the scheme will change from July through to October. We are expecting more detail to be released on 12 June.
- July 2020
The Government will continue to pay 80% of gross pay, employer National Insurance and employer pension contributions for furloughed workers as outlined in the “How does the scheme work until 30 June” section above.
- August 2020
The Government will pay 80% of gross pay up to a cap of £2,500 per month. Employers will be required to pay the employer National Insurance and employer pension contributions.
- September 2020
The Government will pay 70% of gross pay up to a cap of £2,187.50 per month. Employers will be required to pay the other 10% of gross pay to top up furloughed workers’ pay to 80% of their normal wage (subject to the overall cap of £2,500 per month). Employers will continue to be responsible for paying employer National Insurance and employer pension contributions.
- October 2020
The Government will pay 60% of gross pay up to a cap of £1,875 per month. Employers will be required to pay the other 20% of gross pay to top up furloughed workers pay to 80% of their normal wage (subject to the overall cap of £2,500 per month). Employers will continue to be responsible for paying employer National Insurance and employer pension contributions.
- July 2020
- As with the previous scheme, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
How to apply
How we can help
We can help you gather the information above as well as helping you to work out the most appropriate claim to ensure that your underlying calculations are both fully compliant and maximised.
Please note that employers may need to take legal advice when changing employees’ statuses to furloughed. As a Sedulo client, national law firm Freeths LLP will provide you with a template furlough letter to send to employees free of charge. If you require additional legal advice on furlough, selecting employees for furlough and seeking agreement, this can be provided for a fixed charge capped at £300+VAT for Sedulo clients. To receive a copy of the free template letter or to seek further advice, please contact Kevin Poulter at [email protected].