Reminder – Changes to the Coronavirus Job Retention Scheme

By Australasian Recruitment Company – July 28, 2020

Reminder – Changes to the Coronavirus Job Retention Scheme

Reminder – Changes to the Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (CJRS) in the UK which has witnessed millions of people being paid by the government, whilst not being allowed to work, comes to an end on  October 31st 2020 – just 3 months from now.

From July 1st, employers have been allowed to bring back furloughed employees part time, using the flexible-furlough model. Employees no longer need to be furloughed for three weeks minimum, so rotations on and off furlough can also be made on a more frequent basis.

How Flexible-furlough works:

  • For an agreed number of hours, the employee can return to work on a part work / part furlough basis. Employees are paid the normal salary when working, whilst they receive the furlough grant when not working.
  • Employers must calculate the employee’s usual hours so that they can be compared with actual hours worked, to arrive at the correct allocation of Company and Government funding.

Key Changes from August 1st, September 1st and October 1st:

  • August 1st – 31st: Employers must pay employers national insurance (13.8% of the salary) and pension contributions (3% of the salary). The government will pay 80% of the wages as before with cap set at £2,500.
  • September 1st – 30th: Employers must pay the above statutory contributions, plus 10% of the salary. The government will pay 70% of the wages, with the cap reduced to £2,187.50.
  • October 1st – 31st: Employers must pay the above statutory contributions, plus 20% of the salary. The government will pay 60% of the wages, with the cap reduced to £1,875.00

Finally, companies are being encouraged to retain employees until January through a further government-backed scheme.  If companies retain employees who have previously been furloughed (at any time from the beginning of the scheme) until January 2021, they will receive a £1,000 bonus for each person from the government.

Should you wish to move a furloughed employee to flexible furlough, these are the steps you will be required to take:

  • Advise relevant employees of the transition from furlough to flexible-furlough status
  • Agree with the employee whatever changes will apply to the transition – this should include hours and shift patterns and whether these will be fixed or at the employers’ discretion
  • Confirm any changes in writing. This could be sent as an amendment to the original furlough agreement (where they would have been expressly advised not to work whilst on furlough) or as a new and separate agreement
  • Advise HMRC whilst observing the new rules
  • Keep records!

Speaking of records, what are the rules? Records must be kept for six years as this scheme will inevitably be audited by HMRC at some point between November 2020 and October 2026. Ensure you keep:

  • Notes of any claim reference numbers
  • Any calculations used should HMRC require more detail
  • Normal vs, actual hours worked for any employees transitioned to the flexible furlough model
  • Copies of all documentation between Employer and Employee

It is advisable to keep and record more details than you think you need. It is quite possible that the person talking to HMRC in 2025 will not be the person who collated the records in 2020. Plan for this to be the case, and ensure that all records and comprehensive, comprehendible and accessible.

The CJRS will be looked back at by economic historians with amazement – millions and millions of people being paid 80% of their salary (up to the £2,500 cap) not to work for up to 8 months! Something which we at Australasian never thought we would write.

Like you, we hope that those millions of people will be paid to work in the months following October 2020.

Take care, stay safe and stay positive!

Australasian Recruitment Company

 

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