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Chartered Accountants

Coronavirus Job Retention Scheme Update – Flexible Furlough & the CJRS

 

On 12th June the Government has announced that the Coronavirus Job Retention Scheme will close on 31st October 2020 – at this point no further aid will be given for furlough as the scheme will be tapered off from August onwards.

 

 

What is flexible furlough?

 

From 1st July employers can start introducing their staff back to work on occasional days and still be able to claim for the furlough days for that employee. However, employers must cover the cost of hours worked in full. A furlough period can last for any amount of time, but claims to the scheme have to be for a minimum of one week

 

 

Deadline to Furlough…

 

The Furlough deadline has now passed, so if you haven’t made your employee furlough on or before the 10th June, you will not be able to make a claim for them on 30th June as they needed to be on furlough for a full 3 weeks prior to this date. However, army reservists, and staff returning from maternity, paternity, adoption, shared parental and parental bereavement leave can still be furloughed for the first time past this date (if their employer has previously put other staff in the company on furlough).

 

 

Dates to remember…

 

The CJRS will start to be reduced and slowly tapered off over a graduated period of 4 months which will mean that employers will have to start contributing towards the cost of paying their employees

 

June – The CJRS will continue as normal, paying 80% of the employees’ wages (up to £2,500) plus employers costs of national insurance and pension contributions.

 

July – Flexible furlough can be introduced and claimed as last month, reduced by the amount of hours the employee has worked.

 

August – The government will still continue to pay 80% of the employees’ wages however employers will now be required to pay the employers contributions towards the employees’ pension and national insurance which equates to 5% of the gross employment costs (the employer would have incurred had the employee not been furloughed.)

 

September – The government will reduce the CJRS and will pay 70% of wages up to a cap of £2,187.50, employers will continue to pay the ER NICs and pensions contributions as well as the 10% deficit up to the £2,500 cap – this now equates to 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.

 

October – The government will make their final reduction to the CJRS and will pay 60% of wages up to a cap of £1,875.00, employers will continue to pay the ER NICs and pensions contributions as well as the 20% deficit up to the £2,500 cap – this now equates to 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

 

 

Key employment law notes*

 

You will need to check your employee’s contracts and review your Furlough agreement with a fresh flexible furlough agreement, it should state that it’s OK for your employee to work on a temporary flexible basis. If you don’t have a contract then you should know that from 6th April 2020 it’s a legal obligation for an employee to receive a contract BEFORE they start work.

Covid-19 Risk Assessments should be carried out and employers should follow the “COVID-19 Secure” guidelines for their sector.

Employers have a duty of care towards their employees which includes not exposing them to unnecessary risk – if a member of your staff was to become Covid positive, this may mean that EVERYONE within your department or company my need to Isolate – this could mean a full closure of your company.

 

 

What if an employee refused to return to work?

 

Naturally employees may be nervous about coming back to work and returning to the new ‘normal’, it is important to reassure any nervous employees of the efforts you have made to keep the workplace safe. You should take the circumstances of an anxious employee into consideration. If an employee still does not want to return to work then you could agree to allow an extended period of home working (if and where possible) or arrange for them to take time off as holiday or unpaid leave.

If an employee refuses to attend work without a valid reason then you may wish to consider disciplinary action*

 

 

Coronavirus Job Retention Scheme fraud

 

HMRC has appealed to employees to encourage them to report their concerns if they are in any way worried that an employer is abusing the CJRS. Employees can go direct to HMRC and report employers if they believe that an employer is fraudulently claiming from the scheme. The money for the CJRS has been generated by UK tax payers and should not be abused by unscrupulous employers.

 

Employees can also report their employers if they believe that they are claiming on their behalf and not paying them what they are entitled to. Similarly, if an employee has been asked to work whilst on furlough or attempt to make backdated claims that include periods when the employee was actually working.

 

This is also a reminder that HMRC will be spot checking Furlough claims – all documentation MUST be kept for a minimum of 5 years and if an employer is found to of made a dishonest claim, Employers will be required to pay the amounts back to HMRC in full. They will most likely be named and shamed in the paper and in more extreme circumstances, they may even face a prison sentence.

 

*take professional advice from a HR expert before you action anything.

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