Job Retention Scheme: phase two
The Job Retention Scheme (JRS) has been a lifeline for employers looking to avoid staff lay-offs because of Covid-19. Now it's changing.
You can use it part time
From 1 July 2020, JRS gives you a half-way house: flexible furloughing. You can bring employees who have been furloughed back to work, for any amount of time and any shift pattern. There's no longer a minimum furlough period. You must agree any new flexible furlough arrangement with employees, and confirm it in writing. If bringing staff back, you are responsible for paying wages under the normal terms of the employment contract, with tax and National Insurance contributions (NICs) for any hours worked. But you can still use JRS for the hours staff don't work. This has the potential to help your business adapt creatively as the economy emerges from lockdown.
Other changes to the scheme mean it's no longer possible to use furlough for anyone not successfully claimed for previously. And for any claim periods starting from 1 July 2020, check that you're not claiming for more employees than claimed for in any claim ending by 30 June 2020.
Tip: JRS deadlines
JRS ends on 31 October 2020. Although the last date by which to furlough an employee for the first time was 10 June 2020, (unless they were returning from family leave), if you still need to claim for any period before 30 June 2020, you have until 31 July 2020.
Sharing the cost
Government support will taper off from August. For employees who are on full time furlough, in August, JRS will pay 80% of wages, capped at £2,500. You will pay employer NICs and pension contributions on hours furloughed. In September, JRS will pay 70% of wages, capped at £2,187.50 for hours furloughed. You pay employer NICs, pension contributions and 10% of wages to make 80% total, up to a cap of £2,500. In October, JRS pays 60% of wages, capped at £1,875 for hours furloughed. You pay employer NICs, pension contributions and 20% of wages to make 80% total, up to a cap of £2,500.
If you use flexible furlough, the cap is proportional to the hours your employees are furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.
The revised rules add further complexity, and care will be needed to ensure claims fit the scheme criteria https://bit.ly/2YLoLpt. We should be happy to advise on any aspect of compliance.
Job Retention Bonus
The Summer Economic Update on 8 July 2020 announced a new Job Retention Bonus. This is designed to 'incentivise employers' to continue to keep furloughed staff in work over the economically uncertain period once the JRS ends. It will be a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed until the end of January 2021.
As an employer, you will be eligible to claim the bonus where employees earn at least £520 per month on average for November 2020, December 2020 and January 2021. You must have furloughed and legitimately claimed for them under JRS, and they must have been continuously in your employment until at least 31 January 2021. You will be able to claim the bonus from February 2021, once accurate RTI data to 31 January 2021 has been received by HMRC.
Self-employed Income Support Scheme
The Self-employed Income Support Scheme is being extended until 19 October 2020. HMRC's online portal will open from 17 August 2020, and those eligible will be invited to claim the final grant, covering the period on or after 14 July 2020 https://bit.ly/2AZZazK. The grant, which is taxable, will be worth 70% of average monthly trading profits, capped at £6,570, and paid in one instalment. You can claim whether you claimed the first grant, or not. Claims must, however, relate to the correct period: you will need to confirm that your business has been adversely affected by Covid-19 on or after 14 July 2020. This adds potential complexity, and you can see some examples of what HMRC currently considers being 'adversely affected' means here https://bit.ly/2NJUy3H.