Coronavirus Job Retention Scheme - Flexible furloughing and tapering claims

Summary

This article covers flexible furloughing in Sage 50cloud Payroll.

Description

Check you're using the latest Job Retention Scheme Module so you can make a claim in Phase 2.

This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements.

For Employers, PAYE and general tax enquiries you should call HM Revenue and Customs (HMRC) National Advice Service Helpline on 0300 200 3200, contact your local HMRC office or visit their website at www.hmrc.gov.uk In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.

Resolution

The rules and eligibility of the CJRS changes from Wednesday 1 July. Find out more >

Flexible furloughing

From Wednesday 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim the CJRS grant for their normal hours not worked. You pay your employees as normal for any hours that they've worked. Employers will also be able to agree any working pattern with employees that have previously been furloughed.

When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of one week. This is a minimum period and employers making claims for longer periods, such as those on a monthly or fortnightly cycles will be able to do so.

Who's eligible?

To be eligible for the grant, you must agree any new flexible furloughing arrangement with your employee and have confirmation of this agreement in writing. You can then claim the grant for the hours the employees are not working calculated by a reference to their usual hours worked within a claim period.

What needs to be reported?

You'll need to report the hours the employee has worked, and the amount of hours they would have normally been expected to work, during the claim period.

Example:

An employee works a fixed amount of hours, this is 35 hours over five days. During this period, the employee is only needed for 3 days (21 hours) a week.

This employee will be paid by the employer at the normal rate for the 21 hours that have been worked. The remaining 14 hours are paid at the furlough rate and can be reclaimed under the Job Retention Scheme.

Tapering claims

From August 2020, the amount that can be reclaimed will gradually be tapered to reflect that people will be returning to work:

In June and July, the Government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee doesn't work. Employers will pay employees for the hours they work.
In August, the Government will pay 80% of wages up to a cap of £2,500 and employers will pay ER NICs and pension contributions for the hours the employee doesn't work.
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 and pension contributions and 10% of wages to make up 80% 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 and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

You can claim for multiple pay periods and employees at the same time. The start date of your claim is the start date of the earliest pay period you’re claiming for. The end date of your claim is the end date of the most recent pay period you’re claiming.

As with the current scheme, you can still choose to top-up your employee's wages above the scheme grant at your own expense.

TIP: Wage caps are proportional to the hours an employee is furloughed. For example, an employee's entitled to 60% of the £2500 cap if they're place on furlough for 60% of their normal hours.

	July	August	September	October
Government contribution: Employer NICs and pension contributions	Yes	No	No	No
Government contribution: Wages	80% up to £2,500	80% up to £2,500	70% up to £2,187.50	60% up to £1,875
Employer contribution: Employer NICs and pension contributions	No	Yes	Yes	Yes
Employer contribution: Wages	-	-	10% up to £312.50	20% up to £625
Employee receives	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month

Important dates to note:

10 June 2020	Final date by which an employer can furlough an employee for the first time (furlough is a minimum period of three weeks).
30 June 2020	Coronavirus Job Retention Scheme closed to new entrants.
1 July 2020	Only employees who have been furloughed previously, for a period of three weeks, can be claimed for from this date.
1 July 2020	Furloughed employees can be brought back to work with CJRS being claimed for the hours not being worked
1 July 2020	Claim periods will be limited to months, no overlapping months will be permitted
1 July 2020	Employers will be able to claim under the new scheme.
31 July	Final date for employers to make claims for the period to 30 June 2020.

Register for a free demo

Want to see the Job Retention Scheme Module in action? Our Sage 50cloud Payroll experts are running free live webinars. As well as watching the demonstration, you'll be able to put your questions to our experts.