Various grant schemes are available to employers as a result of the Coronavirus pandemic to safeguard jobs.
Coronavirus Job Retention Scheme – EXTENDED UNITL THE END OF MARCH 2021 (Previously November 2020)
The government’s Coronavirus Job Retention Scheme (CJRS) has been extended until the end of March 2021 following further government announcements made on 5 November 2020.
The Coronavirus Job Retention Scheme (CJRS) has been extended with employees to receive 80% of their current salary for hours not worked up to a maximum of £2,500.
Key points regarding the extended scheme:
- Neither the employer nor the employee needs to have previously used the CJRS to make a claim.
- The scheme will be flexible covering hours not worked. Thus, staff can return to work full or part-time.
- Employees must have been on an employer’s PAYE payroll by 30 October 2020.
- The scheme will be i line with the scheme in August 2020 – the government will pay 80% of wages up to a maximum of £2,500.
- Employers are required to cover Employers National Insurance and pension contributions (approx. 5% of total employment costs).
- The scheme will be reviewed in January 2021 and employers may be asked to contribute more towards employees wages.
- There will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension. Employers will be able to claim from 8am on Wednesday 11 November 2020.
- Guidance on how to claim will be made available by HM Revenue & Customs on 10 November 2020.
The rules regarding furloughed workers is complex. Further guidance can be found on HM Revenue & Custom’s website:
Coronavirus Job Retention Scheme prior to 31 October 2020
An overview of the previous Coronavirus Flexible Furlough Scheme is detailed below:
- July 2020 – The government paid 80% of employee wages up to a maximum of £2,500 per employee per month, as well as covering employer national insurance and employer pension contributions.
- August 2020 – The government paid 80% of wages up to a a maximum of £2,500 per month per employee however employers were required to pay employers national insurance contributions and pension contributions.
- September 2020 – The government paid 70% of wages up to a cap of £2,187.50 per employee per month for the hours the employee does not work – employers will pay employers national insurance contributions, pension contributions and 10% of the wages for the employee for the period making the employees wages up to 80% for the period they do not work.
- October 2020 – The government paid 60% of wages up to a cap of £1,875 per employee per month for the hours the employee does not work – employers will pay employers national insurance contributions, pension contributions and 20% of wages for the employee for the period making the employees wages up to 80% for the period they do not work.
Job Retention Bonus
The Job Rentention Bonus will no longer be paid in February 2021 due to the extention of the Coronavirus Job Retention Scheme (CJRS). An alternative retention incentive will be put in place at the appropriate time.
Employers who have utilised the CJRS will receive a one-off payment of £1,000 per employee for each furloughed employee who remains continuously employed until 31 January 2021. The bonus will provide additional support to retain employees.
To be eligible, the relevant employees will need to:
- earn at least £520 per month (above the Lower Earnings Limit) on average for November, December and January.
- have been furloughed at any point and legitimately claimed for under the Coronavirus Job Retention Scheme.
- have been continuously employed up until at least 31 January 2021.
Employers will be able to claim the bonus from February 2021 once accurate Real Time Information (RTI) data to 31 January 2021 has been received.
Detailed guidance is available at https://www.gov.uk/government/publications/job-retention-bonus/job-retention-bonus.
Coronavirus Job Support Scheme
The government has announced a Job Support scheme will commence at the end of the Coronavirus Job Retention Scheme (due to end March 2021) which will be in place for 6 months. The key points announced are as follows:
- The scheme will subsidise the pay of employees who are working fewer than normal hours due to lower demand.
- It will apply to staff who can work at least a third of their usual hours.
- Employers will pay staff for the hours they do work.
- For the hours employees can’t work, the government and the employer will each cover one third of the lost pay.
- The grant will be capped at £697.92 per month per employee.
- All small and medium sized businesses will be eligible for the scheme.
- Larger business will be eligible if their turnover has fallen during the crisis.
- It will be open to employers across the UK even if they have not previously used the furlough scheme.
Based on the information currently provided an example of how the scheme might work:
An employee normally earns £2,000 a month however is currently working 50% of their normal hours.
The employer would pay the employee for the hours worked – therefore normal pay of £1,000.
The lost pay is then £1,000 of which the government will cover a third and the employer will cover a third – employer paying an extra £333 and the government paying £333.
The employee would therefore receive total pay of £1,666. This is 83.3% of their normal pay for working 50% of their normal hours.
This is an increased cost per hour for the employer.