• Date

    06 Nov 2020
  • Category

    Tax, Employer Solutions, Payroll

Further changes announced for Job Retention Scheme

Following our earlier Insight advising of an extension to the Job Retention Scheme (JRS), the Chancellor has now announced that the scheme will be further extended through to the end of March 2021. This is to provide businesses with support over the coming winter months.  

The Government will fund 80% of employees’ reference pay for the usual hours that they are unable to work due to the pandemic, up to a maximum of £2,500 per month if paid monthly or £576.92 per week if paid weekly. These earnings caps are to be apportioned based on the unworked hours compared to the usual hours.

The scheme is available to all employers within the UK and employees must have been on the employer’s payroll scheme on 30 October 2020, with a payment notified for the employee by an RTI submission between 20 March 2020 and 30 October 2020.

Employees who were on the payroll on 23 September 2020 but have since been made redundant or stopped working for the employer can be re-hired and placed on furlough.

Employees can be fully furloughed and/or flexibly furloughed, and employers are able to top-up employees’ wages if they wish. Employers should evidence furlough arrangements with employees by written agreements, and this can be backdated to 1 November if put in place by 13 November 2020.

There is no minimum period an employee must be furloughed for, but claims submitted by employers must cover a minimum of seven consecutive days. Claim periods must start and end within the same calendar month, so where a period spans more than one month this is to be split into two separate claims. In the same way as before, claims can be submitted in advance of a payroll run.

Employers are required to pay employees for the hours they work, including employers’ national insurance and pension contributions. Employers will also need to pay the employers’ national insurance and pension contributions on the furlough pay claimed. 

Reference pay

Employees who were previously furloughed, or on the payroll before 19 March 2020.

  • For employees on a fixed salary, the reference pay to use is their wages from the last pay period before 19 March 2020.
  • For employees who are paid varied wages, the reference pay to use is the higher of
    • the wages from the same calendar period in the 2019/2020 tax year, and
    • the average wages from the 2019/2020 tax year.

Employers who previously did not make a JRS claim, or new employees hired since 20 March 2020.

  • For employees on a fixed salary, the reference pay to use is their wages from the last pay period on or before 30 October 2020.
  • For employees who are paid varied wages, the reference pay to use is the average paid between the start date of their employment or 6 April 2020 (whichever is later) and the day before the start of their furlough period.

Usual hours

If you are claiming for employees that are flexibly furloughed, you will also need:

  • the number of hours your employee would usually work in the claim period
  • the number of hours your employee has or will work in the claim period
  • to keep a record of the number of furloughed hours in the claim period.

Employees who were previously furloughed, or on the payroll before 19 March 2020.

  • For employees who work fixed hours, their usual hours are those that the employee was contracted for in the last pay period before 19 March 2020.
  • For employees who work varied hours, their usual hours are the higher of
    • the hours from the same calendar period in the 2019/2020 tax year, and
    • the average hours from the 2019/2020 tax year.

Employers who previously did not make a JRS claim, or new employees hired since 20 March 2020.

  • For employees who work fixed hours, their usual hours are those that the employee was contracted for in the last pay period before 30 October 2020.
  • For employees who work varied hours, their usual hours are the average hours between the start date of their employment or 6 April 2020 (whichever is later) and the day before the start of their furlough period.

The last date for submission of furlough claims up to 31 October is 30 November 2020.

Claims for November onwards must be submitted by the 14th of the following month, with claims for November able to be made from 11 November 2020.

A review will be carried out of the furlough scheme in January 2021 and the economic situation assessed, with a view to altering the level of Government support provided through the scheme.

The Job Retention Bonus is now not relevant, and another incentive will instead be introduced at an appropriate time.

The Job Support Scheme that was due to start in November has now been postponed until further notice.

 

We are here to help

We are of course here to help and will provide further updates once the full guidance is released on 10 November 2020. If you would like to discuss the support available, or have any other queries, please get in touch with your usual Azets contact.

About the author

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Dave Hedges

Partner Southampton
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