Update to Coronavirus Job Retention Scheme in Lead Up to Portal Launch

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Update to Coronavirus Job Retention Scheme in Lead Up to Portal Launch

Team Stafford Brunch advocate Aaron Taft shares Update to Coronavirus Job Retention Scheme in Lead Up to Portal Launch.

The Coronavirus Job Retention Scheme (CJRS) has had a further update after the government released the legislation relating to the Scheme.  

It is always our aim to keep clients up to date with changes and below is a brief guide of the changes to what we have previously released.  This information could still change, it will always be subject to amendments in legislation and guidance but we will do our utmost to release more information when we find out about it. 

The most important update is in relation to a new date being announced “19 March”. This was the day before the Coronavirus Job Retention Scheme was announced by the Chancellor.   

On 15 April 2020, the government announced that a PAYE scheme would need to be active as of 19 March (previously 28 February) and announced that a new starter would have to be “on payroll” on 19 March (previously 28 February).  

On first glance this was welcome news. However, they also clarified that “on payroll” meant that HMRC were aware of the new starter via an RTI submission on or before 19 March.   

It is welcome relief for those employees who are paid either weekly, or paid part way through the month if they previously fell foul of the 28 February rule; but sadly, it does not help all new starters. 

 This means for monthly payrolls, any new starters that started in February but not paid until March, the employees won’t be eligible for furloughing if the March payroll submission occurred after 19 March.  

Further guidance has also been clarified as follows: 

  • The date for redundant employees who can be rehired and made furloughed remains at 28 February. They can be reemployed and even if the RTI submission was post 19 March they can still be furloughed. 
  • All employees on any type of employment contract can be furloughed, but they have clarified any foreign nationals paid on a UK PAYE scheme can also be furloughed. The grant is not classified to “access to public funds” so should incorporate all visas to those with the right to work in the UK. 
  • If an employee started unpaid leave AFTER 28 February the employer has the right to furlough the employee instead. If the employee went on unpaid leave BEFORE 28 February they cannot be furloughed until the date they previously agreed to come back on 
  • Integration of furlough with Statutory Sick Pay (SSP) 

If an employee is sick due to Covid19 they can have SSP (providing they meet the usual National Insurance conditions).  

If an employee is on short term illness (not COVID19 related) or in self isolation (COVID19 related) and therefore entitled to SSP the employer has the right to furlough them instead of paying SSP. The employee is now classified as furloughed. Remember there is a 3 week minimum period of furloughing.  

Anyone on long term sick can also be furloughed at the employer’s discretion. (On a HR note – we are not sure how this actually works with Employment Law and the integration with number of weeks SSP of connected sickness etc would be interesting to get more information on this at a future date).  

  • If an employee is shielding due to being in a high risk category they can be furloughed. If the employee needs to stay home with someone who is shielding (to keep the shielded individual protected) then the employee can be furloughed.  
  • If an employee falls sick during furlough period it is up to the employer whether they take them off furlough pay and pay them SSP instead. If they are put on SSP they can not claim the furlough grant for the same time period as the SSP is paid.  
  • If an employee cannot work due to caring responsibilities (e.g childcare etc) the employee can be furloughed. 
  • Any employee on a fixed term contract can have their contract extended and then furloughed. If the contract is not extended you cannot claim furlough for them. 
  • CJRS and IR35 interaction  – if you are caught under IR35 please contact us for more details of how CJRS affects your situation. 
  • TUPE rules apply for CJRS so the 19 March date is not a factor. 
  • Volunteering work can only be done for non-connected organisations to the employer. The employer can find volunteer work for the employee but cannot be deemed a service or generate revenue for the employer or its associates. 
  • Training guidelines remain unchanged – an employee can complete training on the request of their employer but their pay must meet NMW for the hours trained. This may require a top up by the employer which would not be funded by CJRS. 
  • Calculation HMRC reserve the right to review calculations retrospectively so it is vital copies of the calculations are kept securely. I suspect it is for the usual time frames you have to keep PAYE records for.  
    • As previous for salaried staff it is 80% of the employees salary (basic only) but it is based on their last pay period prior to 19 March 2020 – this update should only affect weekly employees/ mid monthly paid employees 
    • As previous for varied paid staff it is still 80% of the higher of same period earnings from the previous tax year or the average period earnings from 2019/20 tax year. This is to be pro-rata for employees who have worked for less than a year 
    • Confirmation has been given that National Minimum Wage (NMW) does not affect the furloughed amount – it is based on actual pay not hours. Therefore no increase should be given for furloughed staff on NMW in light of the increase from 1 April, unless they are completing any training in the furloughed period. Those hours need to be paid at a minimum of the correct NMW for that time period. 
    • If a furloughed worker paid close to NMW levels requests to complete training for the majority of their working time HMRC guidance suggests employers seek independent advice or contact ACAS. 
    • Any employees returning for statutory leave (SSP, SMP etc) their calculation is based on their previous pay before their statutory pay. So the time periods they have been paid statutory amounts is not included in the calculation. 
  • Details HMRC are asking for as part of the claim: 
    • Employer:  
      • PAYE reference 
      • Number of employees being furloughed 
      • Your Self Assessment UTR or Corporation Tax UTR/Company Reg number 
      • Bank details 
      • Contact name 
      • Contact number 
  • Each employee: 
    • Name 
    • Employee number (optional) Claim period start and end dates 
    • Amount being claimed 
    • National insurance number 
  • Method of claim 
    • At present it appears to be based on Agent login/Employer login on HMRC site 
    • Employers with less than 100 employees – manually input claim for each employee 
    • Employers with more than 100 employees – file upload detailing all employee details as above file format can be .xls .xlsx .csv .ods
  • Employee rights are not affected by Furloughing – so no amendments there.  
  • CJRS Grant cannot be used to substitute redundancy payments. 
  • If an employee’s contract allows them to work for other employers at the same time, then an employee can work for another employer whilst on furlough. 
  • CJRS grant is taxable for income tax and corporation tax purposes – but obviously it is offset against the actual employment costs.

Further details can be found on the below links. Please note, these links will be updated frequently so may differ to this summary. The official guidance should always be followed. 

Legislation link: https://www.gov.uk/government/publications/treasury-direction-made-under-sections-71-and-76-of-the-coronavirus-act-2020 

Guidance link: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme 

The team at Carthy Accountants are happy to discuss these areas with you individually if you contact the team on 01785 248939 or email [email protected].

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