COVID-19 Support: The final stretch of Furlough
We are now well versed with the Coronavirus Job Retention Scheme (CJRS) which has supported, and continues to support businesses through this pandemic crisis and has been extended until 30th September 2021, but here are a few reminders of some key dates and changes as we enter the final stretch of the scheme.
From 1st May 2021 the eligibility for claim periods changed which means that if you have employees who have previously been ineligible for the CJRS, as they were not on your payroll on 30th October 2020, they may be eligible for periods from 1st May 2021 onwards.
For claim periods from May, you can now claim for eligible employees who were on your PAYE payroll on 2nd March 2021. This means you must have made a PAYE Real Time Information (RTI) submission between 20th March 2020 and 2nd March 2021, notifying HMRC of earnings for that employee.
You and your employees do not need to have benefitted from the scheme before making a claim, as long as you meet the eligibility criteria.
To be eligible for the grant, you must have confirmed to your employees in writing that they have been furloughed. You must make sure that the agreement is consistent with employment, equality and discrimination laws and you must keep the agreement for five years. Of course, you must also keep a record of how many hours your employee works and the number of hours they are furloughed. It is therefore essential that before placing any employee on furlough and making a claim for a grant for their wages, you should discuss this with your employees first and make the changes to their contracts by agreement.
The employee does not need to provide a written response and you do not need to place all your employees on furlough. You can still fully furlough employees and/or flexibly furlough employees.
The UK Government will continue to pay 80% of your furloughed employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, to the end of June 2021.
From 1st July 2021, the amount you can claim will start to reduce with you having to contribute towards any unworked furlough hours which means that you will have to pay the difference so that furloughed employees continue to receive at least 80% of their usual wages for the hours they do not work, up to a cap.
This means that for July 2021, you will be able to claim 70% of your employees' usual wages for the hours not worked up to a cap of £2,187.50 per months, which means that you will need to contribute 10% of the costs of the unworked hours, up to a cap of £312.50 per month.
In August and September 2021, you will only be able to claim 60% of your employees' usual wages for hours not worked up to a cap of £1,875 per month, which means that you will need to contribute 20% of the costs of the unworked hours, up to a cap of £625 per month.
Employees will always receive 80% of their wages for hours not worked and you will be required to pay the associated Employers’ NICs and pension contributions.
April furlough claims must be submitted by Friday, 14th May 2021. The amount you can currently claim is 80% of your furloughed employees usual wages for the hours they have not worked up to the cap of £2,500 per month. Make sure you keep records that support the amount of the grants you claim in case HMRC needs to check them at a later date.
Don’t forget you are responsible for the associated employee tax and national insurance contributions to HMRC.
What about holidays?
If you have furloughed employees because of the impact of the pandemic on your business, you can claim under the CJRS for periods of paid leave they take while on furlough, including for bank holidays. If your employee is furloughed for only some of their hours, you can count time taken as holiday as furloughed hours, rather than working hours. This means you can currently claim for 80% of your employee’s usual wages when they are on leave.
In line with the Working Time Regulations, if a furloughed employee takes holiday you should make sure you are calculating the correct holiday pay, and not simply continuing to pay the 80% you receive through the CJRS. You may need to top up your employees’ pay to 100% of their normal hourly rate or salary.
Now would be a good opportunity to review your employees’ accrued annual leave, and, if appropriate, serve notice on them requiring them to take annual leave. This will help you manage accrued holiday and avoid having all your employees trying to take their annual leave at the same time. Remember that you should not place employees on furlough just because they are going to be on leave.
How can we help you?
If you need help with serving notice on employees to take annual leave and/or calculating holiday pay, do get in contact with us.
If you feel that your business will not be able to continue to operate without the Coronavirus Job Retention Scheme to support you, do get in contact with us so that we can help and support you