Flexible Furloughing from 1st July 2020

Important changes are being made to the Coronavirus Job Retention Scheme (CJRS).
The scheme will close to anyone who hasn’t been furloughed for 3 weeks by 30th June, so you will only be able to claim for employees after that if they have been furloughed for a 3 week period at any time before the end of June. That means the last day you can furlough an employee who has not been furloughed before is 10th June. This ensures the minimum three week period is complete by 30th June. You will have until 31st July to make a claim for any periods of furlough up until 30th June. The rules of the scheme then change on 1st July.

From 1 July 2020, you will have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.
You can decide the hours and shift patterns that your employees will work on their return and you will be responsible for paying their wages in full while working. This means that employees can work as much or as little as your business needs, with no minimum time that you can furlough staff for.
Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if you prefer. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.

Employer contributions

From August, the government grant provided through the job retention scheme will be slowly tapered:
• in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
• in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
• in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the 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 the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
• the cap on the furlough grant will be proportional to the hours not worked

If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should not be significantly impacted by that part of the tapering of the government contribution.
Around a quarter of CJRS monthly claims relate to wages that are below the threshold where employer NICs and auto enrolment contributions are due, and so no employer contribution will be required for these furloughed employees in August.

Coronavirus Statutory Sick Pay Rebate Scheme

The coronavirus Statutory Sick Pay Rebate Scheme is now live on GOV.UK.
If you have less than 250 employees, you can now claim for coronavirus-related Statutory Sick Pay (SSP). To make a claim now, click here.

You are eligible to use the scheme if you meet the following criteria:
* you are claiming for an employee who is eligible for sick pay due to coronavirus
* you had a PAYE payroll scheme in operation before 28 February 2020
* you had fewer than 250 employees across all PAYE schemes on 28 February 2020
* you’re eligible to receive state aid under the EU Commission Temporary Framework

The repayment will cover up to two weeks of the applicable rate of SSP, and is payable if a current or former employee was unable to work on or after 13 March 2020 and entitled to SSP, because they either:
* had or have coronavirus
* could not or cannot work because they were/are self-isolating at home
* were/are shielding in line with public health guidance.

You must keep records of SSP that you’ve paid and want to claim back from HMRC.
You must keep the following records for 3 years after the date you receive the payment for your claim:
* the dates the employee was off sick
* which of those dates were qualifying days
* the reason they said they were off work – if they had symptoms, someone they lived with had symptoms or they were shielding
* the employee’s National Insurance number.
You can choose how you keep records of your employees’ sickness absence. HMRC may need to see these records if there’s a dispute over payment of SSP

Making Errors on Coronavirus job Retention Scheme Claims

HMRC has confirmed that, at present, it is still working on a process to enable claimants to amend their claims through the Coronavirus Job Retention Scheme (CJRS), should they make any errors.
The advice in the interim is not to make any changes to subsequent claims to account for any previous mistakes as this action could serve to delay payment, or even result in incorrect payments being made.
If HMRC does identify any errors, it will contact either the relevant business or the agent claiming on their behalf to rectify the claim where possible.
After successfully submitting claims through the CJRS, businesses can expect to receive the funds in their bank accounts within six working days if claims match records that HMRC hold for their PAYE scheme.
In order to ensure that claims are correct, it is recommended that the following steps are taken:
Claimants should read the guidance available prior to making an application. In order to access the guidance, they should go to GOV.UK and search for ‘Coronavirus Job Retention Scheme’ to find a step-by-step application guide and a calculator
* You should check that their employees are eligible
* You should check their calculations each time a claim is submitted, as details may have changed.
* Only one claim should be submitted per pay period – multiple claims cannot be submitted for overlapping periods.
* If there are any missing National Insurance numbers for employees, you should try to locate them to avoid delays to claims. Where employees do not yet have an NI number, you should contact HMRC in order to process their claims.
* Double check all of the information in the claim before you submit it, including your bank details.
* Remember that if you are claiming the employment allowance, this will already have reduced your Employer National Insurance liability, so don’t claim for it again.

Claiming for furlough payments – what you will need

The furlough payment recovery mechanism is to be launched sometime during the week commencing 20th April.

Employers must have a UK bank account and have enrolled for PAYE online. This process can take up to 10 days under normal working conditions.

Employers should discuss with their staff and make any changes to the employment contract by agreement.

To make the claim you will need:
* Your PAYE reference number
* The number of employees being furloughed
* Names and National Insurance numbers of the furloughed staff
* Payroll numbers for the furloughed staff
* UTR, Corporation Tax reference or Company Registration Number.
* The claim period (start and end date) minimum 3 consecutive week period)
* Amount claimed
* Bank account number and sort code
* Contact name and phone number

Claims can be backdated to 1st March where employees were already furloughed. Worker’s wages should be reduced to 80% of their salary within the payroll before they are paid. Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

Employment Law Changes from April 2020

There are quite a few employment law changes from April 2020 that will affect your payroll.

New pay rates from 6th April 2020:
The National Living wage for over 25 year olds increases to £8.72 per hour from £8.21.
The National Minimum Wage for 21 to 24 year olds increases to £8.20 per hour from £7.70.
The National Minimum Wage for 18 to 20 year olds increases to £6.45 per hour from £6.15.
The National Minimum Wage for under 18 year olds increases to £4.55 per hour from £4.35.

The weekly earnings threshold for National Insurance and Statutory payments increases from £118 to £120 per week.
Statutory Sick pay increases from £94.25 to £95.85 per week.
Statutory Maternity/Paternity/Bereavement/Adoption Pay increases from £148.68 to £151.20 per week.

The Employment Allowance increases from £3000 to £4000 per year but will no longer apply to large companies or groups whose total Class 1 NICs for 2019-20 is greater than £100,000. This allowance needs to be claimed each tax year and included in the first Employer Payment Summary submission.

Student loan annual earnings threshold have increased:
Plan 1 £19,390
Plan 2 £26,575
Post graduate £21,000

Class 1A employer NIC is now due on termination payments over £30,000.

Holiday Pay calculations: the reference period for calculating holiday pay increases from 12 to 52 weeks for variable pay workers.

Employers that engage ‘off-payroll’ workers will become responsible for determining their employment status any paying NICS for those who are deemed to be employees.