Coronavirus Job Retention Scheme (‘CJRS’)

What is it exactly?

You will probably recognise the term ‘furloughed worker’, which is essentially what the Scheme actually does. CJRS is a support option becoming available to any business who operates a PAYE scheme and has been introduced to reduce redundancies due to the economic downturn caused by the COVID-19 crisis. A furloughed worker is an employee on ‘sleeper mode’; CJRS can help employers retain employee jobs via a Government grant funding which covers 80% of an employee’s wages, up to a maximum threshold of £2,500 per employee per month.  This amount also includes employer NIC and pension

Which businesses are eligible?

• All UK businesses are eligible; size and sector of the business is irrelevant.
• The employee(s) furloughed must be on the company’s PAYE scheme.

Which employees are eligible?

The exact criteria will be the responsibility of the employer to decide upon, but guidelines are below:

• Employees who do not have a job to carry out/have been told to stop working because of the COVID-19 crisis;
• Employees who are in self-isolation and cannot work from home;
• Employees who cannot work from home due to issues such as childcare/dependency responsibilities.
• The employee(s) cannot carry out any work tasks during their furlough period to qualify.
• CJRS should apply to all employees on PAYE, including those on zero-hour contracts and company Directors.
• CJRS relief can be backdated to the 1st March 2020, but will be limited to being backdated to the day the employee completely stopped undertaking duties of the employment post 1st March 2020. As employees are required to be completely in-active, CJRS will not apply to employees who have been put on reduced hours. So, for example, if an employee had a reduced workload because of Coronavirus from the 8th March, and then completely in-active from the 15th March, the CJRS grant could only be backdated to the 15th March.
• Zero-houred furlough employees – employers will be required to use an average of their hours worked to calculate the amount available under the CJRS. However, we still wait clarification on what period of earnings will be used in this calculation.

Bridging the 20% wage gap

There is no obligation for employers to bridge the 20% salary gap.

Pension Contributions

There is some uncertainty pending Government advice regarding pension contributions (as well as holiday and other benefits) but the current working assumption is that pension contributions will continue to be due.

Company director specific concerns

Directors often opt to take a low or no salary from their business. Instead they will often utilise dividends to top up their income, depending on profits. As dividends are not subject to PAYE, the dividend amounts are unlikely to form part of the CJRS calculation for the director. Directors in this position are likely to find that should they qualify for a CJRS grant, the amount paid would likely be 80% of a low salary.

A director must be non-active to be furloughed, so if they are continuing to manage or support the business, they cannot be considered as completely in-active and therefore may fail the CJRS requirements.

Contractual rights

Please carefully review your employment contracts. Employment contracts are there to protect employees against reductions of pay alongside other substantial changes to employment status without agreement. Therefore, it is important to gain written consent from any employee that you place in furlough status.

Please do remember that legality and proper due process must still be followed. Additionally, ACAS guidelines should be adhered to, including that of engaging employees in open communication and including those affected in the decision-making process.

In essence, employers need to get agreement from the worker to place them on furlough status, unless it’s covered by a clause in the employment contract.

Please also remember to keep accurate written records and minute any meetings you conduct with employees – this is to ensure transparency and fairness for both employer and employee.  Please also aim to support employees in this situation; it is a difficult time that requires sensitivity. Once an employee is furloughed it would be prudent to keep them updated – don’t leave anyone guessing in this uncertain time.

• Please visit ACAS for further information/up-to-date guidance: https://www.acas.org.uk/coronavirus/if-the-employer-needs-to-close-the-workplace

How do businesses implement/access CJRS?

• Designate affected employees as furloughed workers and notify your employees of this change in writing, gaining their consent where necessary.
• Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal, which the Government states will be activated very soon.
• It is the employer’s responsibility to claim the 80% furlough funding, not their employee(s).

For further details/real-time information please regularly visit the following HMRC links:

• Employers/Businesses page: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
• Employees page: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees
• A letter from Dr Luke Evans MP for Bosworth: http://employmentlawbulletins.com/wp-content/uploads/2020/03/Luke-Evans-MP.pdf?mc_cid=01a67c73e7&mc_eid=c520469606

 

Please remember that White Hart Associates are here to support you through this difficult time, so please do not hesitate to contact us – the team will be happy to walk you through any processes you are unsure of.

 

FAQ section:

• Question: Is the funding £2,500 net or gross?
• Answer: We believe it is gross including employers NIC but are not 100% sure because the information missing.
• Question: Are dividends paid to directors included?
• Answer: No just salary paid through PAYE.
• Question: When will the monies be received?
• Answer: The first funding is unlikely until earliest end of April 2020.
• Question: Where can I access the portal?
• Answer: Not open yet – will advise our client base when it becomes activate.
• Question: Will WHA be claiming on our behalf?
• Answer: No, we will send details of the portal to our clients to make the claims. Reason for this is that it will be a quicker process and expedite your chances of receiving the funding quicker.  Also, there may be some questions on the portal that are best placed to be answered by the employers rather than the payroll advisors.  We will of course provide support if you need our help. 
• Question: Can we split the workforce into two groups alternating each month those on furlough?
• Answer: Not enough information – it would be common sense for this to be allowed, but so far when the detail come out from these Government announcements, it is never headlined.
• Question: What about staff started after end of February 2020?
• Answer: These are not covered by the furlough scheme.

Keep updated!

The Government are routinely issuing new announcements, so it is important to keep yourself updated in this ever-changing climate. You do this by visiting the Government’s dedicated business support web page on: https://www.businesssupport.gov.uk/. White Hart Associates endeavour to keep you all up to speed with any changes as and when the Government makes important announcements.

Disclaimer: We hope you have found the information above useful, and whilst White Hart Associates have tried to ensure all details are correct from the sources cited, the above is for guidance only and cannot be relied upon completely, due to the lack of proper detail released by the Government and the portal for claiming CJRS not yet being open and active. As things are changing fast, please ensure to keep up-to-date with Government and HMRC announcements.