Coronavirus Job Retention Scheme (CJRS)
The relief came up to prevent laying off employees in the time of crisis. Under the Job Retention Scheme the government has decided to reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. This scheme will remain in action from 1 March 2020 at least till October 2020.
|Month||Amount of Reimbursement under CJRS (for hours employee doesn’t work)||Employer’s Contribution|
|June and July 2020||80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions||No Contribution|
|August 2020||80% of wages up to a cap of £2,500||ER NICs, pension contributions|
|September 2020||70% of wages up to a cap of £2,187.50||ER NICs, pension|
contributions and 10% of wages to make up 80% of the total up to a cap of
|October 2020||60% of wages up to a cap of|
|ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500|
STEP 1: Check if you can make a claim
Every UK business, running payroll or had started one on or before 19 March 2020 is eligible for Job Retention Scheme provided they are enrolled for PAYE online and have a UK bank account.
Any businesses including charities, recruitment agencies, and public authorities can apply for claims under this scheme.
The scheme will close to new entrants from 30 June. From 1 July 2020 onwards, the scheme can be used by only those employers who have previously used the scheme in respect of employees they have previously furloughed.
STEP 2: Check if you ticked pre-requisites before making the claim
- Registration for PAYE online
- UK bank account number and sort code (only provide bank account details where a BACS payment can be accepted)
- Employer PAYE scheme reference number
- Number of employees being furloughed Each of such employee’s National Insurance number (if you have one or more without a National Insurance number please contact HMRC)
- Each employee’s payroll or employee number (optional)
- Start and end date of the claim
- The full amount you’re claiming for including employer National Insurance contributions and employer minimum pension contributions
- Phone number
- Contact name
- Provide either your name (or the employer’s name if you’re an agent) or Corporation Tax unique taxpayer reference or Self-Assessment unique taxpayer reference or company registration number.
STEP 3: Agree on being furloughed
If you opt for the scheme then you won't have to layoff your employee; instead, you need to classify them as being “furloughed workers”
Part-time furloughing: From 1 July 2020 onwards, businesses may bring previously furloughed employees back to work part-time and still receive a grant for the time when they are not working. This flexibility has been announced on 29 May 2020, to help people get back to work. The payments under part-time furloughing can be explained as below:
- For hours worked: The employee shall be paid by the employer as per the employment agreement for the hours worked. Also employer will be responsible for paying the tax and NICs due on those amounts.
- For the furlough period: The grant under the scheme can be claimed for the hours their employees are not working calculated by reference to their usual hours worked in a claim period.
STEP 4: Apply for Coronavirus Job Retention Scheme?
The online service to apply for claim under CJRS is now available. While applying for the claim you’ll need the Government Gateway user ID and password you got when you registered for PAYE online. Click here to apply for the claim. Earlier you had to submit your claim in one session only. Now, if you do not finish your claim in one session, you can save a draft but complete your claim within 7 days of starting it.
STEP 5: Submission to HMRC
Once agreed, the furloughed employee should not take up any work for you until their position refreshes back.
You will have to submit to information relating to employees furloughed like their full name, their National Insurance number, the amount claimed HMRC, etc.
HMRC will then reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month through a system of reimbursement.
HMRC has laid down how to work out 80% of your employee’s wages, National Insurance contributions (NICs) (download your guide to NIC
here), and pension contributions for the purpose of making claims. There is also an online calculator available. Click here to use the same.
STEP 6: Entitlement while being furloughed
When on furlough, employees should not provide services to or generate revenue for, or on behalf of your organisation or a linked or associated organisation.
- The employee gets sick under furlough scheme:
Furloughed employees retain their statutory rights, including their right to Statutory Sick Pay. However, it will be up to employers to decide whether to move these employees onto Statutory Sick Pay or to keep them on furlough, at their furloughed rate. If you choose to:
- Move furloughed employee to SSP: You will have to pay SSP yourself, although may qualify for a rebate for up to 2 weeks of SSP. Also, you can no longer claim for the furloughed salary.
- Continue to keep them furloughed: Then you are eligible to claim for furlough salary through the furloughed scheme.
- The employee doing volunteer work:
Employees can take up volunteer work provided this DOES NOT result in the provision of services to or generation of revenue for, or on behalf of the organisation or a linked or associated organisation.
- Employee undertaking training:
Employees can undertake training, this DOES NOT result in the provision of services to or generation of revenue for, or on behalf of the organisation or a linked or associated organisation.
Where training is undertaken by furloughed employees, at the request of their employer, they are entitled to be paid at least their appropriate national minimum the wage for this time.
- The employee working as a union or non-union representative:
Such employees may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. They MUST NOT provide services to or generate revenue for, or on behalf of the organisation or a linked or associated organisation.
- Employment taxes:
Employees will continue to pay the employment taxes out of their wages. Even pension contributions need to be made as usual unless the employee has opted out or stopped saving into their pension.
- Employee rights:
Employees still have the same rights at work, including statutory Sick Pay, maternity and other parental rights, rights against unfair dismissal, redundancy payments.
After applying for the claim
After making the claim, HMRC will check whether the claim is correct. If it’s correct then it will give you claim reference number and pay the claim amount by BACS into your bank account within 6 working days.
Inform your employees that you have made a claim and that they do not need to take any more action and pay employees their wages if you have not already.
You need to keeps records for the following:
- The amount claimed and claim period for each employee
- Claim reference number for your records
- Your calculations in case HMRC need more information about your claim
These records need to be kept for 6 years.
Current status (September 2020):
With effect from 1 September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours furloughed employees do not work
- The employers will now have to pay 10% of furloughed employees’ wages to make up 80% of their total wages up to a cap of £2,500. The wage cap is proportional to the hours not worked.
- Employers will continue to pay furloughed employees’ NI and pension contributions.
Job Retention Bonus
The Job Retention Bonus allows employers to claim a one-off payment of £1,000 for every employee they have previously received a grant for under CJRS and who remain continuously employed through to the end of January 2021.
To be eligible, the employee must have received earnings in November, December, and January and must have been paid an average of at least £520 per month, a total of at least £1,560 across the three months.
Employers will be able to claim the bonus after they have filed PAYE information for January 2021, and the bonus will be paid from February 2021.
If employers intend to claim the Job Retention Bonus, they must:
- ensure all employee records are up to date
- accurately report employees’ details and wages on the Full Payment Submission (FPS) through the Real-Time Information (RTI) reporting system
- make sure all CJRS claims have been accurately submitted and inform HMRC about any changes needed (for example if they’ve received too much or too little).