As the country gets used to a new normal, businesses across the UK are seeking guidance regarding the historic Coronavirus Job Retention Scheme (CJRS).
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In this article we aim to explain the CJRS scheme which enables Employers to access grants for up to 80% of employee’s wages during this difficult time. If you have any legal questions or require legal advice regarding CJRS, please contact Lloyd Clarke on 01206 239761 or you can email him by clicking on the link.
The Coronavirus Job Retention Scheme (CJRS)
The Coronavirus Job Retention Scheme known as CJRS was announced by the Chancellor on 20th March to help businesses struggling due to the Coronavirus outbreak. Since this time changes and improvements have been made to the scheme with more details being released by the Government.
What is the Coronavirus Job Retention Scheme (CRJS)?
The Coronavirus job retention scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020.
The Coronavirus job retention scheme essentially allows employees to be temporarily laid off work for a minimum of three weeks and still retain an income. During this time the employee remains an employee of the firm but does not work.
However, employees can still take part in volunteer work or training as long as it does not provide services to or generate revenue for, or on behalf of the employer. This means that the army of volunteers who have courageously come forward in their hundreds of thousands in the NHS’ time of need will not suffer financially for doing so.
What businesses can apply for the Coronavirus job retention scheme?
All businesses, charities and public authorities can apply. However, employer’s everyday work must have been ‘severely affected’ by Coronavirus. In addition, furloughed employees must have been on your payroll on or before 28 February 2020 to qualify.
Can my employee’s employment status effect my application for the Coronavirus job retention scheme?
No, employers can apply for the Coronavirus job retention scheme for full-time or part-time employees, for employees on agency contracts and for employees on flexible or zero hour contracts. All employees are included.
However, you may have to calculate their pay slightly differently for example:
If an employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. Likewise, if the employee is paid a varied rate.
If an employer offers enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that they can claim through the scheme. The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.
If an employee is on sick leave or self-isolating, they should receive Statutory Sick Pay, but can be furloughed after this.
If an employee has more than one employer, they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.
What can I do if I’ve already made redundancies?
If you have recently made redundancies due to COVID19 you can rehire your employees and apply for the CJRS instead, however you must have made your employees redundant on or after 28th February 2020.
If redundancies are unavoidable due to the nature of your business, we strongly recommend you seek legal advice. Lloyd Clarke is able to provide you with a fixed fee settlement agreement service at £250 + VAT.
How do I apply for the Coronavirus job retention scheme?
To be eligible for the Coronavirus job retention scheme grant, employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
You can apply via the forthcoming online portal which is currently being designed by HMRC. This will work through your ePAYE scheme. For employers using SAGE and other PAYE platforms changes should appear upon updating your software. Applications can be made once every three weeks.
The government are hoping the new portal should be ready for the end of April. If you haven’t done so already it may be wise to register for HMRC payroll updates so you can receive the latest information.
To make your claim for the Coronavirus job retention scheme you will require:
- ePAYE reference number
- number of employees being furloughed
- claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 weeks)
- bank account number and sort code
- contact name
- your phone number
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
Once HMRC have received an employers claim and they are eligible for the grant, they will pay it via BACS payment to a UK bank account. Employers must pay the employee all the grant they receive for their gross pay – no fees can be charged from the money that is granted.
How much can I claim under the Coronavirus job retention scheme?
Employers can claim for 80% of their furloughed employees’ basic monthly wage. This is however capped at £2,500 per month, plus national insurance (NI) and pension contributions.
Fees, commission and bonuses are not included.
Will I still have to pay National Insurance or Pension contributions?
Employers NI and the minimum automatic enrolment employer pension contributions will not be deducted from a furloughed employee’s salary before they receive their net pay.
Income Tax and Employee National Insurance contributions will be deducted as normal.
This means employers choosing to top up their employee’s salary will pay more in Employer NI and automatic enrolment contributions. This additional amount will not be funded through CJRS.
If I furlough my employees what do I have to do?
At a minimum, employers must pay their employee 80% of their regular wage or a maximum £2,500 per month. An employer can also choose to top up an employee’s salary by 20%.
If any employed staff complete online training courses whilst they are furloughed, you must pay them at least the National Living Wage or the National Minimum Wage for the time spent training. This is even if this is more than their subsidised wage.
What rights do employees have if furloughed?
Employees that have been furloughed have the same rights as they did previously. This includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.
Will I have to include the Coronavirus job retention scheme payments in my tax returns?
Yes, payments received by a business must be included as income of the business and included in any taxable profits for Income Tax and Corporation Tax purposes. Businesses can also deduct employment costs as normal.
What additional support can I receive for my business?
You may be able to apply for a few different packages. If you pay VAT for example you can get this deferred, along with Income Tax payments. The government are also offering SME’s statutory sick pay relief, this is particularly important for key workers such as carers. You may be able to benefit from the HMRC Time To Pay Scheme allowing you extra time to pay any tax due or owed too.
For businesses in England who are operating in the retail, hospitality, leisure and nursery sector the government have offered you a 12-month business rates holiday. These businesses can also apply for a grant up to £25,000 if they have property with a rateable value between £15,000 and £51,000.
Can I apply for a business loan?
Now may actually be a good time to consider refinancing as the Bank of England has reduced the interest rate to 0.1% which is an historical low. Therefore, you may be able to receive more favourable rates for existing lending or new loans. If your loan is significant or secured, we recommend you seek legal advice.
Nick Attwell our commercial legal expert can offer you a fixed fee service which would be linked to the amount you wish to borrow. For a quote please call 01473 229242 or email Nick by clicking the link.
We would also recommend this if you wish to apply for the Coronavirus Business Interruption Loan as the loan amount can be up to £5m.
What help can I receive if I’m self-employed?
For self-employed people the government have offered a Self-Employment Income Support Scheme. If you are entitled to this the HMRC will contact you and invite you to apply online. The rules mirror that of the CJRS therefore you will need to work out your average monthly pay.
You can do this by adding together your yearly trading profits for the last three years and then dividing it by three.
However, this will not apply to personal service companies (people who are owner-managers of their companies, largely paid by dividends).
You may also be entitled to a Small Business Grant of up to £10,000. This is for businesses in receipt of small business rate relief or rural rate relief. Again, HRMC will contact you if you are entitled.
If you are struggling now however and cannot wait, you can apply for Universal Credits. This is simple to do if you have a laptop or tablet. But please be aware if you are married or living with a partner you may need to make a joint claim.
I would like more information about the Coronavirus job retention scheme or employment law?
If you or your business are affected in anyway by the Coronavirus or any other employment law issue, please contact Lloyd Clarke on 01206 239761 or email Lloyd by clicking on the link.