Coronavirus job retention scheme Guidance (CJRS)
More guidance has been published on the coronavirus job retention scheme ( CJRS) but there are still areas that we are awaiting further information on. The following is an update of the current position.
Who can Claim?
All employers can benefit from the scheme, even owner-managed businesses.
Owner-managed businesses can make a claim from the CJRS, effectively they will be furloughing themselves and the understanding is that they do no income-generating work for their business but can continue to run the business from a statutory perspective, for example preparing their accounts and returns.
The following employers would therefore qualify:
- Businesses
- Charities and not-for-profit organisations
- Parents employing nannies
- Public sector organisations, although the government expects that most of them will still have the majority of employees working in frontline services.
Which employees are covered?
To reclaim a CJRS grant from HMRC, the employer has to designate employees as furloughed (essentially a period of paid leave when they cannot work) other terms and conditions of employment continue unless these have been varied too.
Whilst furloughed staff can’t do any work for the employer that furloughed them, they can undertake training, work on a self-employed basis or as a volunteer. They cannot work for another employer unless they already did that work before.
The guidance refers to employees (and occasionally workers) which we take to mean that the following individuals are covered:
- Employees (including zero-hours and fixed-term) with a start date of 28 February 2020 or earlier, even if they were added to a March payroll retrospectively because they missed the February payroll cut-off date
- Apprentices
- Temps on PAYE at a recruitment agency
How to furlough
The CJRS doesn’t override employment law. The employer must mutually agree with an employee, ideally in writing as it’s a contract change, that the employer is designating them as furloughed (there is no work for them due to COVID-19) and what the employer is planning to pay them whilst furloughed.
Some businesses may choose to continue to pay full salary even though they can only reclaim 80% up to the cap. Other employers may only be able to pay 80% of regular salary or even less than that until the CJRS grant arrives.
An employee can be furloughed for a minimum of three weeks at a time and for a maximum of three months from 1 March, although the government might extend the scheme. The individual could remain furloughed even if the CJRS is not extended, but then the employer would not have any grant funding to cover their wages.
How much?
The grant from the scheme will be the lower of £2,500 per month per employee or 80% of gross regular wages plus employer NIC on the grant figure plus 3% employer pension contributions on the grant figure using the qualifying earnings threshold. The apprenticeship levy can’t be reclaimed.
When calculating claim values for directors of owner-managed companies you can only consider the salary that has been subject to PAYE, not any dividends paid to those directors.
Running the payroll
It is important to distinguish between the CJRS grant funding and normal payroll operations which continue as normal. We will be in touch with all client to confirm what staff are being furloughed and the payments that are being made to them and where employees are on variable hours to calculate the amounts that can be reclaimed under the CJRS.
The Claim
A standalone portal will be introduced by the end of April, to make claims. It’s our understanding that to make the claim the following details will be required:
- the number of employees being furloughed
- the start and end period of furlough
- the value of the claim being made
As we process payroll in the coming weeks and months we will be collating this information as we go along so that as soon as the portal is available we can start to process the CJRS grants for our payroll clients.
When will I receive the grant?
In conversation with The Chartered Institute of Chartered Accountants of Scotland (ICAS), it was suggested that while the portal will be open to make claims from the end of April it is likely that it may be the into June before funds will be paid.
Support for businesses
We understand that a possible payment date of June for CJRS claims will place significant cash pressures on business: a follow-up e-mail will be sent out which provides details on support available to businesses in the form of grants and temporary funding, payment holidays and time to pay arrangements that are available to those who have been affected by coronavirus.
For more COVID-19 information on job retention scheme guidance, get in touch here. Or stay up-to-date with all the latest COVID-19 announcements including job retention, click here.
