Re-joining the Coronavirus Job Retention Scheme?

Re-joining the Coronavirus Job Retention Scheme?

Employers considering the CJRS due to new lockdowns, but who haven’t participated for some time, must be familiar with the current rules.

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Caroline Laffey

Partner, Employer Reward Services

KPMG in the UK

Email

Also on home.kpmg

The introduction of further national lockdowns, and extension of the Coronavirus Job Retention Scheme (CJRS) up to at least the end of April, has led many employers to review decisions about furloughing workers and claiming support for wage costs through the scheme. However, employers who have not used the scheme recently – perhaps due to improved prospects for their businesses over the summer – should be aware that the rules have evolved over recent months and differ significantly to those that were in force prior to 31 October 2020. This article summarises some key considerations for employers who are thinking about re-entering the CJRS.

What are the key enhancements from 1 November 2020?

Employers who have not participated in the CJRS recently should be aware that the extension of the CJRS that was announced on 31 October 2020 was not merely a continuation of the previous scheme.

In summary, key enhancements to the CJRS are that:

  • The maximum claim has increased – employers can now claim 80 percent of furloughed employees’ reference pay subject to a cap of £2,500 per month, but must bear the associated employer’s NIC and pension contributions;
  • More employers can participate – employers are no longer required to have participated in the CJRS prior to 1 July 2020 in order to access support; and
  • More employees are eligible – employers can now furlough any employee who was on their payroll on 30 October 2020 and included in a Real Time Information (RTI) PAYE submission filed between 20 March and 30 October 2020, and the CJRS is no longer restricted to employees who were furloughed for at least three weeks prior to 1 July 2020.

Additionally, HMRC have clarified that employees caring for children at home as a result of school or childcare facilities closing may be furloughed.

What should employers rejoining the CJRS consider?

In addition to the increased financial support and relaxations summarised above, employers who re-enter the CJRS after 1 November 2020 should bear in mind the following developments:

  • Reference pay calculations might need to be revisited – for some employees, the basis on which reference pay is calculated on or after 1 November 2020 will differ from how it would have been calculated before that date so employers will not necessarily be able to apply the methodology they used when they last participated in the scheme;
  • Furloughed workers must receive at least 80 percent of their reference pay – HMRC have confirmed that where furloughed employees receive less than this, the shortfall must be made good, or the claim repaid to HMRC. Given the clarifications HMRC have made to their guidance over the life of the CJRS on how reference pay should be calculated, employers should review decisions in relation to overtime, commission and other allowances being included in reference pay;
  • New furlough agreements with employees are likely to be required – agreements must now be in place in advance of the employee being furloughed;
  • Statutory or contractual notice periods cannot be included in claims – this applies from 1 December 2020 and is a significant change from earlier versions of the CJRS; and
  • Deadlines for submitting claims are much shorter – claims must now be submitted within 14 days of the end of each calendar month with only a further 14 days to correct any underclaims. This could place significant pressure on those responsible for calculating and processing payments.

Finally, for claim periods that begin on or after 1 December 2020, HMRC will publish certain details of participating employers and the levels of claim made.

For more commentary on the CJRS, see our employer Q&A.

For further information please contact :

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