A few weeks ago, Chancellor Rishi Sunak announced a number of temporary measures designed to ease the financial worries of businesses during the Coronavirus crisis. One of these measures is the Coronavirus Job Retention Scheme (CJRS), which is designed to pay a portion (80%, up to a maximum of £2,500 per month) of employees’ salaries enabling businesses to retain crucial members of staff whilst the business is unable to operate fully.
The scheme is able to be backdated to 1 March and went live on Monday 20 April.
On launching the scheme, the Chancellor said: “Our unprecedented job retention scheme will protect millions of jobs across the country and is now up and running.
“It’s vital that our economy gets up and running again as soon as it’s safe – and this scheme will allow that to happen.”
Around 5,000 HMRC staff will be operating the scheme, ensuring that money is paid out and reaches bank accounts within six days, and that phone lines and web-chat services are available around the clock to answer questions and deal with problems.
What Is Meant By Furlough?
One of the terms being used frequently with regards to the CJRS is ‘furlough’, which refers to the employment status of the employees who are enrolled by their employer into this scheme.
A furloughed employee is essentially a member of staff who is still on the employers payroll but who is not allowed to perform any duties of their job, whilst the business is temporarily not in operation (or is working on a highly reduced basis) as a result of the “lockdown” necessitated by the Coronavirus pandemic.
What About Tax?
While you are on furlough your wage will still be subject to the usual income tax and National Insurance deductions, which will be taken out in the regular way. Employees do not need to do anything special about their tax contributions at this time.
What Rights Do Furloughed Employees Have?
Employees on furlough retain the same rights that they had when working, meaning that they can still get sick pay, maternity leave and other parental rights, rights against unfair dismissal and redundancy payments if they later lose their job.
Qualifying Criteria For CJRS
The Coronavirus Job Retention Scheme applies to employers of all sizes and across all sectors, including not-for-profits and charities. The scheme is available to any UK employer who has a PAYE payroll that was started on or before 19 March 2020, and employers can only claim for employees who were on this payroll before 19 March 2020, and were notified to HMRC on an RTI submission before this date.
This scheme is available for employees on any type of contract, including full time, part time, agency contracts and flexible or zero-hour contracts. Foreign nationals can be furloughed, and all employees must agree not to work for their employer whilst they are furloughed.
What Is Needed In Order To Apply
To make a claim (as an employer) you will need:
- To be registered online for PAYE
- Your UK bank account number and sort code
- Your employer PAYE scheme reference number
- The total number of employees to be furloughed
- Each employee’s National Insurance number
- Each employee’s payroll number
- Start and end dates for your claim
- The full amount that you are claiming for including employer National Insurance contributions and employer minimum pension contributions
- Your phone number
You will also need to provide either:
- Your Corporation Tax unique taxpayer reference, or
- Your Self Assessment unique taxpayer reference, or
- Your company registration number
- For companies that have more than 100 employees, you will need to prepare and submit a spreadsheet file to HMRCdetailing the claim amounts for each employee
- Employees on unpaid leave cannot be furloughed if this period of leave started before the 28 February and continued on after the date. They can come back on the intended return date and then be furloughed however.
- Employees who have been made redundant may be furloughed, providing they were made redundant after 28 February 2020, and the company rehires them later
- Employees hired after 19 March 2020 cannot be furloughed or claimed for under the scheme
- Employees who have more than one employer can be furloughed for each job, and the cap applies for each individual job, not overall
- Employees must agree in writing to being furloughed before the claim can be made
- An employee must be furloughed for a minimum of 3 weeks.
- An employer can furlough a member of staff multiple times. For example, they can be furloughed for a month, then taken of furlough (when they can start performing work again) for a period of time, then be subsequently furloughed again. There is no limit on the number of occasions that this process can be repeated.
In order to apply for CJRS, you’ll need to head to the gov.uk website with your Government Gateway user ID and password and sign in there. You will be able to fill out an online application using the details listed above and will then be given a claim reference number.
HMRC will check over your claim and if it is correct the claim amount will be paid into your bank account within six working days
Keep a copy of all records, including:
- The amount claimed and the claim period for each employee
- The claim reference number
- Your own calculations in case HMRC need more information
You are then free to tell your employees that you have made a claim and that they do not need to do anything more to get their furlough wages. Pay your employees as soon as possible, or as usual if you have not yet missed any wage payments.
How Long Is The Scheme Set To Last?
In the original announcement, the scheme was set to run until 1 June 2020, but later announcements have extended this until the end of that month, with a likelihood that it will be extended further.
Working Whilst On Furlough
Whilst claiming from the Coronavirus Job Retention Scheme, employees must not work for you at all, as soon as they are notified that they are on furlough. A furloughed worker is still considered an employed person, and you as the employer may choose to fund the difference between the CJRS payment and their usual salary.
If employees are not receiving full pay, and require money to top up the payment, they can apply for Universal Credit, which can provide the extra support needed during this time to cover things like rent, mortgage payments, bills and so on. More information about this can be found on the gov.uk website
The government are actively encouraging business to participate in this scheme, their mantra being they will do “whatever it takes” to maintain employment through this huge period of disruption.
Unlike the CBILS loan scheme, where successfully receiving funding seems to be much more miss than hit (with only 1.4% being successful as of a week ago), this scheme seems to be working as intended, and those who can make use of it are very much advised to do so.
The team at TFMC are here to help and if you have any questions related to this scheme then please contact us on 0800 470 4820 or via email at[email protected]and we will do our best to assist.