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Furlough and the Coronavirus Job Retention Scheme

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Furlough and the Coronavirus Job Retention Scheme Furlough and the Coronavirus Job Retention Scheme. Updated 15 June 2020 For the latest guidance, please visit https://uk.markel.com/insurance/ /getmedia/42d7a9b7-8215-431f-9f14-b8e932e2c435/Furlough-and- the-Coronavirus-job-retention-scheme NOTE: This guidance is subject to change in accordance with updated government guidance. This factsheet was last updated on 15.06.20. It incorporates the government updates to the employer guidance on claiming for employees' wages through the CJRS: (https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme) and The Coronavirus Act 2020 Functions of HMRC (Coronavirus Job Retention Scheme) Direction dated 20.5.20 (which updates the original Direction dated 15.04.20 and sets out the legal framework for the Scheme): https://assets.publishing.service.gov.uk/ government/uploads/system/uploads/attachment_data/file/886959/CJRS_DIRECTION_No2___20_05_2020.pdf CONTENTS 01 Flexible furloughing and tapering of the CJRS 3 24 Employees that are paid the National Minimum Wage and training 12 02 Changes to the CJRS to apply from 1 July 2020 3 25 Volunteer work during furlough 13 03 Closure of CJRS to new entrants 4 26 Consultation for furlough 13 04 Tapering of the CJRS 4 27 Terms and conditions of employment during furlough 13 05 Example of how to work out how much furlough pay you can claim for from September 2020 5 28 Notice pay where notice given during furlough 13 06 What happens if employers cannot afford to pay 29 Sick leave during furlough 14 employer N.I. contributions and pension contributions 30 Annual leave during furlough 14 from August 2020 and the minimum 10% employer contributions that apply in September and 20% 31 Supporting staff during furlough 15 contributions that apply in October 2020 for 32 Employees who may be placed on furlough under furloughed employees? 5 the CJRS 15 07 Eligibility 6 33 Where employees have been given notice of 08 Guidance on public funding and the CJRS 6 redundancy or stopped working for their employer on or after 28 February 2020 15 09 Childcare sector 6 34 Shielding employees 16 10 Social care sector 7 35 Employees with caring responsibilities 16 11 The definition of a furloughed employee 7 36 Apprentices 17 12 How to access the CJRS 8 37 Furloughed employees working as union or employee 13 Record keeping 8 representatives 17 14 Payment to employers 9 38 Redundancy consultation during furlough 17 15 Payment to employees 9 39 Disciplinary and grievance procedures during furlough 18 16 Company directors who are on the PAYE payroll of 40 Do employers have to make up the 20% short-fall their company 9 in pay for those workers on furloughed leave? 18 17 Company directors with an annual pay period 10 41 Do employees have the right to be placed on 18 Calculation of wages for furloughed workers for furloughed leave? 18 claim periods to 30 June 2020 10 42 Can the employer ‘rotate’ employees on furlough 19 Employees whose pay varies 10 leave and employees who are working where there is reduced work? 18 20 Past overtime, fees, commission, bonuses and non- cash payments and the definition of ‘non-discretionary’ 43 Can employees work for another employer when payments 11 furloughed, including a new employer? 19 21 Benefits in kind and salary sacrifice schemes 11 44 What about employees that employers have inherited following a TUPE transfer? 19 22 Returning to work from statutory leave 11 23 Statutory parental leave following furlough 12 Furlough and the Coronavirus Job Retention Scheme | Updated 15 June 2020 | 2 Under the Coronavirus Job Retention Scheme (CJRS), which – From 1 July, agreed flexible furlough agreements can opened for claims on 20 April 2020 and remains open last any amount of time. Where a previously furloughed until 31 October 2020, after which time it closes, all UK employee starts a new furlough period before 1 July this employers are able to access support to continue paying furlough period must be for a minimum of 3 consecutive part of their employees’ salary for employees who are weeks. This is the case regardless of whether the 3 furloughed by reason of circumstances resulting from the consecutive-week minimum period ends before or after coronavirus epidemic. 1 July. – For example, a previously furloughed employee can start a new furlough period on 22 June which would have to 01 Flexible furloughing and tapering continue for at least 3 consecutive weeks ending on or of the CJRS after 12 July. After this the employee can they can then be flexibly furloughed for any period. However, after 1 July, employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the On 12 May 2020 the Chancellor announced the extension period up to 30 June. of the CJRS until the end of October 2020. – Although flexible furlough agreements (i.e. worked periods) On 29 May 2020, The Chancellor set out changes to the can last any amount of time, the period that employers can CJRS to apply as follows: claim for through the CJRS must be for a minimum claim period of 7 calendar days. 02 Changes to the CJRS to apply from Please refer to the below HMRC “example of how to calculate 1 July 2020 the amount you should claim for an employee who is flexibly furloughed”: – To support the transition back to work, from 1 July 2020, https://www.gov.uk/government/publications/find-examples- employees are permitted to work whilst on furlough to-help-you-work-out-80-of-your-employees-wages/example- provided, with the employer being able to claim the CJRS of-a-full-calculation-for-an-employee-who-is-flexibly- grant for their wages in respect of their normal hours furloughed not worked. Employers cannot claim via the CJRS for Please also refer to the below HMRC “example of how employees’ wages for the periods when they are carrying to calculate your employees’ wages, national insurance out work. Currently, furloughed employees must cease all contributions and pension contributions” for both claim periods work for a minimum period of 21 days as a condition for spanning June and July and for claim periods from July: employers claiming their furloughed wages under the CJRS. For the periods when employees are on furlough and not https://www.gov.uk/government/publications/find-examples- working, employers can claim 80% of normal wages up to to-help-you-work-out-80-of-your-employees-wages/ a cap of £2,500 per month as well as employer National examples-of-how-to-work-out-80-of-your-employees-wages- Insurance and pension contributions for the hours the national-insurance-contributions-and-pension-contributions employee does not work. The above publication also sets out how the tapering to the – For claim periods from 1 July 2020, employers will be CJRS applies. required to submit details of the usual hours an employee would be expected to work in a CJRS claim period (based The following HMRC guidance sets out how and when to on the number of hours the employee was contracted for report employees' wages to HMRC using the PAYE Real Time at the end of the last pay period ending on or before 19 Information system when you’ve claimed wages through the March 2020) and the actual hours worked, or hours which CJRS: . will be worked, to HMRC. From 1 July 2020, when claiming https://www.gov.uk/guidance/reporting-payments-in-paye- the CJRS grant for furloughed (unworked) hours, employers real-time-information-from-the-coronavirus-job-retention- will need to report and claim for a minimum period of a scheme week. From 1 July 2020, claim periods will no longer be able to overlap months. Also, from this date, the number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS rules. Employers will be able to make their first claim under the new CJRS scheme from 1 July 2020. Furlough and the Coronavirus Job Retention Scheme | Updated 15 June 2020 | 3 03 Closure of CJRS to new entrants in relation to a furlough period of at least 3 consecutive weeks taking place any time between 1 March 2020 and The CJRS will close to new entrants from 30 June 2020. 30 June. This is subject the maximum cap the previous The final date by which an employer was able to furlough an employer was subject to. employee for the first time (i.e. where they have not previously However, where employees who have not been previously been furloughed) was 10 June 2020, in order for the current furloughed prior to July 2020 become extremely clinically 3-week furlough period to be completed by 30 June 2020. vulnerable (e.g. due to receiving a new health diagnosis) or Employers will have until 31 July 2020 to make any claims in become clinically vulnerable, or have remained on sick leave, respect of the period from 1 March to 30 June 2020. in receipt of sick pay only, they will not be eligible for furlough Parental leave new entrant exemption under the CJRS; although they may be eligible for sick pay where they are unfit for work or, in the case of a suspension In an exception to this, the government announced on of a pregnant employee for a health and safety reason, to 9 June 2020 that parents on statutory maternity and paternity suspension on full pay. leave, adoption leave, shared parental leave and parental bereavement leave who return to work from leave will be HMRC published the following new guidance document on eligible to be furloughed for the first time under the CJRS 12 June 2020 in relation to calculating claims under the new after the 10 June cut-off date.
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