We’re now well into CJRS v2 which runs from 1 July to 31 October 2020 and no further claims can be made under CJRS v1 which ended on 30 June.
The premise behind phase two is employers being encouraged to bring furloughed workers back to work, albeit part-time and flexibly if they need to. The level of grant support is being reduced – there’ll be no reclaim allowed for NI or pension costs from 1 August onwards and then in September, only 70% of eligible wages costs can be reclaimed, reducing further to 60% in the last month of the scheme in October. Employers must continue to pay employees in accordance with the employment contract (which may have been varied when CJRS v1 was first announced and employees agreed to a salary reduction to 80% of their previous salary or a maximum of £2,500).
As previously, the amount employers are eligible to claim back under the CJRS grant is based on calendar days (with some complex rules on rounding thrown into boot) rather than the working days approach more commonly used for payroll calculations. This means that either under employment law or even custom and practice, employers may end up paying out more than they’re able to reclaim for furloughed employees.
Employees must not work during their furloughed hours, so under flexible furlough, employers must accurately record actual hours worked (even for monthly paid staff). This is especially important if claiming in advance of the end of the pay period if anticipated actual hours for the remainder of the pay period may change. Just as they already do in national minimum wage investigations, HMRC could ask to see emails and mobile phone records to prove whether employees have been working.
Under flexible furlough, any holiday taken during the relevant claim period should be counted as furloughed hours rather than working hours. However, the guidance states that employers should not place employees on furlough simply because they are on holiday at that time – it is likely that this would be regarded as an abuse of the scheme. Similarly, employers must not move an employee whose furlough period had finished back into the furlough scheme simply because they have booked a holiday. If there is any uncertainty, then employers may wish to consider taking legal advice.
If mistakes have been made in earlier claims which resulted in overpayments of CJRS grant, these can be corrected by deducting the relevant amount from future claims. No further action is needed, but a record of this adjustment should be kept for six years. If no further claims are going to be made, then employers need to contact HMRC to obtain a reference number and submit a Faster Payment, CHAPS or Bacs payment to HMRC’s account. Employers must contact HMRC directly to amend an error that has resulted in an underclaim and HMRC is expected to conduct additional checks on these.
As for all aspects of CJRS, the employer must keep (until 30 June 2025) a written agreement confirming the furlough arrangement with each employee.
Whilst the CJRS will end on 31 October, employers may be able to claim the Job Retention Bonus, which is a one-off payment of £1,000 for every employee who they have previously claimed for under the scheme and who remains continuously employed through to 31 January 2021. Eligible employees must earn at least £520 a month on average between 1 November 2020 and 31 January 2021. Claims can be made after employers have filed PAYE for January and payments will be made from February 2021.
Please contact your usual Sagars team member for help with the CJRS or get in touch with our payroll manager, Andrew Senior.