The government has expanded its job support scheme for businesses facing Tier 2 restrictions.
The key changes are:
Businesses in the hospitality, accommodation and leisure sector will also get £2,100 for every month that they are under Tier 2 or Tier 3 Covid restrictions.
More to follow
Employers who retain staff for three months after the furlough scheme ends will receive £1,000 government ‘bonus’ for each employee, the Chancellor has announced.
The bonus will be:
Employees must earn above the National Insurance lower earnings limit (£520 per month) on average between 31 October 2020 when the CJRS ends and the end of January 2021.
The bonus payments will be made from February 2021.
Although a modest sum, this will undoubtedly be useful, coming at a time when those businesses which have deferred tax debts begin to work out how to pay these. For example, self assessment taxes due at the end of January (by the unincorporated business owner) and VAT at the end of March.
Starting from November, the government’s new Job Support Scheme will cover up to 22% of pay for workers in “viable” jobs for the next six months. The scheme will replace the current Coronavirus Job Retention Scheme due to end on the 31 October.
Under the new scheme workers would need to work at least a third of their normal hours to qualify. Employers will pay staff for the hours they work but for the hours they don’t work, the government and the employer will each cover one-third of the lost pay. The government’s contribution will be capped at £697.92 per month.
Subject to the detailed rules applying, anyone employed as of yesterday (23 September 2020) is eligible, and all small and medium-sized businesses can apply, although larger businesses can only use the scheme if their turnover has fallen during the pandemic. Employers do not have to have used the furlough scheme previously. Large employers are not expected to have been making capital distributions, such as dividend payments or share buybacks while claiming the grant.
Sunak also clarified that employers retaining furloughed staff on shorter hours can claim both the Job Support Scheme and the Job Retention Bonus, which will be available in February next year.
The Chancellor has announced the government’s plans to change the CJRS which will now be re-engineered to support businesses sending staff back to work. Employers will be able to put staff on part-time furlough, claiming the CJRS grant for a portion of their salary.
Flexible furloughing of employees starts from 1 July onwards. The hours and shift patterns employees work can be decided by the employer to suit the needs of their business. Employers will pay the wages for the time employees are in work and can apply for a job retention scheme grant to cover any of the usual hours the employee is still furloughed for. Employees can still be kept on full furlough if needed.
Note for employers:
Employees must have been furloughed under the initial scheme (CJRS V1) for them to be eligible for a furlough grant under the revised scheme (CJRS V2). Note that since there is a three-week minimum furlough requirement under the initial rules, it follows that any new period of furlough leave must have started by 10 June 2020 to be complete when the initial scheme ends on 30 June and so ensure the employee remains eligible for CJRS V2 from the 1 July.
In July the grant will be calculated on the same basis (the lesser of 80% of pay and £2,500). The intention is that the government will reduce its contribution over the remaining months of the scheme – August to October – with a corresponding increase in the employer contribution. Note that from 1 August onwards, the scheme will no longer cover the cost of employers’ National Insurance nor pension contributions applicable to the grant.
Further points to note:
What you need to know
Start date: 1 March 2020
End date: 31 October 2020 - the scheme will change after 31 July.
Employees need to be on payroll (ie on an RTI report) as of: 19 March 2020
Claims portal opened: 20 April 2020
Who can claim:
Any employer with a UK PAYE scheme and a UK bank account.
How much can be claimed:
A grant of 80% of furloughed employees' pay up to a maximum of £2,500 per month, plus employers' NIC and auto-enrolled pension contribution.
How long does the scheme run:
From 1 March 2020 until 31 October 2020 - the scheme will change after 31 July.
From August, employers currently using the scheme will have more flexibility to bring their furloughed employees back to work part time while still receiving support from the scheme.
This revised scheme will run for three months from August through to the end of October. Employers will be asked to pay a percentage towards the salaries of their furloughed staff. The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month. More specific details and information around its implementation will be made available by the end of May.
Which employees can be claimed for: Employees who were on payroll (ie on an RTI report) as of 19 March 2020, and have been put on furlough. Employers should write to their employees confirming that they have been furloughed and keep a record of this communication until at least 30 June 2025.
What does furlough mean: Employees on furlough cannot do any work for the organisation. The further Treasury Direction under Sections 71 and 76 of the Coronavirus Act 2020 published on 22 May emphasises that the training activities a furloughed employee can undertake while on furlough must not provide a service to the employer, nor can they contribute to the business activities or generate income or profit for the employer. They must however be relevant to the employee's employment.
How much do I have to pay the employee: The employee must be paid in accordance with their employment contract (which may be amended by agreement) and they retain their usual rights at work. The employee must be paid at least as much as the amount of the grant received from HMRC.
When will grants be paid: Within six working days of a claim being submitted.
How long do staff have to be furloughed: The grant can only be applied for a minimum period of three weeks, although this can be extended. It is possible to move employees in and out of furlough as business requirements evolve. However good records will need to be kept to validate any grants claimed and this will be subject to the minimum furlough period of 3 continuous weeks.
Who isn't covered by CJRS
The scheme isn't open to those businesses that:
The scheme doesn't cover employees who: