The CJRS has now been running for a while, and with the easing of the lockdown, the chancellor is now looking to start winding down the scheme – closing on 31 October 2020. A few changes have been announced and the official guidance has been released by HMRC. This is available here.
The changes are staking place over the next few months. It is important to remember that if you had not furloughed an employee by 10 June 2020, then you can no longer take advantage of this scheme. This means you must have informed an employee they were on furlough, not necessarily made a claim. Wages caps are proportional to the hours not worked (e.g. a £2,500 worker who comes back to work part time for 1/3 of the month, will have a wage cap on furlough of 2/3 x £2,500).
For June 2020
There are no changes to the grant levels. You must have made your claim for periods up to June 2020 by 31 July 2020.
From 1 July 2020
You may invite employees back to work part time while they also remain on furlough. Any working hours are paid at their normal wage – any hours that they would ‘usually’ work, but you cannot provide work for, can be claimed through the 80% grant. Usual hours are those that they are contractually obligated to do – not hours that they may like to work – the same hours that are covered by the CJRS up until now.
You should look at how much is left of your employment allowance, as this will reduce your staff cost in the short term, and may mean that you are only covering the cost of the employer’s pension contributions.
From 1 August 2020
You will receive the 80% grant towards gross pay, but are now expected to cover the Employer NI and pension contributions for all employees (furloughed and working).
From 1 September 2020
The government contribution changes to 70%, to a cap of £2,187.50. You must pay the 10% to bring the wages up to the minimum 80% (£2,500 cap) on furloughed workers.
From 1 October 2020
The government contribution reduces to 60%, with a cap of £1,875. You must pay the 20% top up to 80% (£2,500 cap).
The following table is an extract from the HMRC guidance.
|Government contribution: employer NICs and pension contributions||Yes||No||No||No|
|Government contribution: wages||80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875|
|Employer contribution: employer NICs and pension contributions||No||Yes||Yes||Yes|
|Employer contribution: wages||–||–||10% up to £312.50||20% up to £625|
|Employee receives||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month|
The current position is that the CJRS scheme will close, as ever the guidance is forever changing.
What does this mean for my employees?
Hopefully the relaxing of the lockdown rules will mean that employers can start to predict demand, and what their staffing needs are before any larger decisions need to be made. You may find that a negotiation with some employees is a good option to bring them back – running on a part time rota if you think that the demand will increase in the longer term, but only need one person filling a role.
If you need any help, or your payroll is getting too complicated we can help prepare your payroll on a month by month basis. We look forward to hearing from you.