On 29 May 2020, the Chancellor of the Exchequer, Rishi Sunak, announced changes to the Job Retention Scheme as part of the daily Government briefing.
For July, the government will pay 80% of wages up to a cap of £2,500 as well as employer NICs and pension contributions for the hours one of your employees doesn’t work. As an employer you have to pay your employees for the hours they work.
In August, the government will pay 80% of wages up to a cap of £2,500 and you will pay you employer NICs and pension contributions for the hours your employees do not work.
In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours your employees do not work. As the employer you will also pay employer NICs and pension contributions and 10% of wages to make up 80 per cent total up to a cap of £2,500.
In October, the government will pay 60% of wages up to a cap of £1,875 for the hours your employees do not work. You will also pay employer NICs and pension contributions and 20 per cent of wages to make up 80 per cent total up to a cap of £2,500.
HMRC have confirmed the following important dates:
- The scheme will close to anyone who hasn’t been furloughed for 3 weeks by 30 June, so you will only be able to claim for employees after that if they have been furloughed for a full three-week period at any time before the end of June.
- If you intend to furlough an employee who hasn’t been furloughed before, you will need to agree that with them and start their period of furlough on or before 10 June. This is the last day on which someone who has never been furloughed before can start a period of furlough and qualify for the scheme – this ensures the minimum three-week period is complete by 30 June.
- You will then have until 31 July to make a claim for any periods of furlough up until 30 June.
From 1 July, employers have been able to bring back to work employees who have previously been furloughed for any amount of time and any shift pattern, while still being able to claim under the Scheme for their normal hours not worked. You will be able to agree any working arrangements with previously furloughed employees.
- When claiming the grant for furloughed hours, employers will need to report and claim for a minimum period of a week.
- This is a minimum period and those making claims for longer periods such as those on monthly or two weekly cycles will be able to do so.
- To be eligible for the grant, you must agree with your employees any new flexible furloughing arrangement and confirm that agreement in writing.
- You can claim the grant for the hours your employees are not working calculated by reference to their usual hours worked in a claim period.
- You will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
- For worked hours, employees will be paid by you as their employer, subject to their employment contract and you will be responsible for paying the tax and NICs due on those amounts.
Although the employer contribution is be phased in more slowly than expected, a lot of businesses may not be ready to take the hit of these extra costs. Employers in the hospitality sector and others who were forced to close down by the Government so have seen up to a 100% drop in takings with no fixed date yet for re-opening, will be amongst the hardest hit.
This information is up to date at the time of writing, but could change, so if you have any questions about your business and your employees, please do call me on 0118 940 3032 or click here to email me.