CJRS – where are we now?
On 20th March 2020, Chancellor Rishi Sunak announced the Coronavirus Job Retention Scheme (CJRS), in a bid to fulfil his promise of doing “whatever it takes” to support businesses and individuals through the Coronavirus pandemic.
- This funding was open to all employers with a PAYE payroll scheme that was created and started on or before 28th February 2020, including charities.
- Employers could apply for grants of 80% of furloughed employees’ (employees on a leave of absence) monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage, provided they keep the worker employed.
- The scheme covered the cost of wages backdated to 1st March 2020, if applicable.
There was a lot of noise surrounding this following announcements from other European countries and what had been proposed in the U.S.A. by President Donald Trump, that it didn’t go far enough, nor deep enough to cover directors of limited companies who were not on PAYE.
Following the perceived peak of the pandemic, with the R number returning to a level that had been targeted by Downing Street (below 1.0), the country was told to go back to work. So, at the end of June we were informed by government that if employers wanted to “flexibly furlough” employees from 1st July onwards then they should:
- agree the hours and shift patterns that they wanted employees to work from 1st July
- pay employees’ wages for the time they are in work and apply for a job retention scheme grant to cover the remainder of their usual hours for which they are still furloughed
- claim for further furlough periods as needed
For the repayment of previously furloughed staff, employers would have until 31st July to make any claims in respect of the period to 30th June.
Before we fast forward to the end of August, the Chancellor offered an additional incentive to employers for maintaining existing jobs, through a Job Retention bonus of £1,000 for continuously employing staff until at least January 2021. Following this, employers needed to be aware of further changes from 1st September, where:
- CJRS would pay 70% of usual wages up to a cap of £2,187.50 per month for the hours furloughed employees did not work.
- employers would still need to pay furloughed employees 80% of their usual wages for the hours they did not work, up to a cap of £2,500 per month. Employers would need to fund the difference between this and the CJRS grant themselves.
- the caps are proportional to the hours not worked. For example, if an employee is furloughed for half their usual hours in September, employers are entitled to claim 70% of their usual wages for the hours they do not work up to £1,093.75 (50% of the £2,187.50 cap).
- employers would continue to have to pay furloughed employees’ National Insurance (NI) and pension contributions from their own funds.
Swiftly moving to the end of September, employers now need to be aware of further changes from 1st October, those being:
- HMRC will pay 60% of usual wages up to a cap of £1,875 per month for the hours furloughed employees do not work.
- employers should continue to pay furloughed employees at least 80% of their usual wages for the hours they do not work, up to a cap of £2,500 per month. Employers will need to fund the difference between this and the CJRS grant themselves.
- the caps are proportional to the hours not worked. For example, if an employee is furloughed for half their usual hours in October, employers are entitled to claim 60% of their usual wages for the hours they do not work, up to £937.50 (half of £1,875 cap).
- employers must still pay their employees at least 80% of their usual wages for the hours they don’t work, so for someone only working half their usual hours they’d need to pay them up to £1,250 (half of £2,500 cap), funding the remaining portion themselves.
- employers should continue to pay furloughed employees’ National Insurance and pension contributions from their own funds.
As we prepare for what is being dubbed by some as the “second wave”, Mr Sunak has altered the make-up of the CJRS scheme for 6 months under a different guise of a Job Support Scheme (JSS). This is set to “allow firms to preserve viable jobs.”. This scheme is open to firms that had not previously taken part in the CJRS and forms part of the ‘Winter Economy Plan 2020’ by protecting jobs where businesses are facing lower demand over the winter months. For those taking up the scheme, from 1st November:
- Employers will continue to pay the wages for the hours staff work.
- For the hours not worked, the government and the employer will each pay one third of their usual wages (capped at £697.92 per month).
- Employers will need to meet their share of the pay for unworked hours, and all employer National Insurance contributions and statutory pension contributions, from their own funds.
- This means that employees will receive at least two thirds of their usual wages for the hours not worked.
To be eligible, employees must:
- be registered on PAYE payroll on or before 23rd September 2020. This means a Real Time Information (RTI) submission notifying payment in respect of that employee must have been made to HMRC on or before 23rd September 2020
- work at least 33% of their usual hours. The government will consider whether to increase this minimum hours threshold after the first three months of the scheme.
Claims can be made from 1st December and will be paid monthly. This scheme works in addition to the aforementioned Job Retention Bonus Scheme.
HMRC is providing webinars to further understand these changes. You can choose a date and time here.
Other support available to businesses and individuals can be found in our blog Coronavirus – the story so far.