Tuesday 1 September marks the first major change to furlough, as the scheme winds down and employers start to pay towards salaries.
Last month, employers were asked to contribute National Insurance and pensions contributions for all their furloughed staff for the first time.
This month, employers are also being asked to pay 10% of their employees’ salaries, on top of ER NICs and pension contributions.
Starting 1 September:
- The government will pay 70% of wages, up to a maximum cap of £2,187.50 for the hours the employee is on furlough.
- Employers will pay 10% of wages (up to £312.50) as well as National Insurance and employee pension contributions.
- The employer ‘top up’ ensures that an employee receives 80% of their wage (up to £2,500). The caps are proportional to the hours not worked.
New claims can only be made for an employee who is returning from statutory parental leave or is a military reservist. Otherwise, you can only continue to claim through the scheme if:
- You have previously furloughed the employee for 3 consecutive weeks between March 1 and 30 June.
- You submitted your claim before 31 July.
In October, the rules will change again, with the government paying 60% of wages (up to £1,875) and employers contributing at least 20% (up to £625) as well as National Insurance and employee pension contributions. The Coronavirus Job Retention Scheme will then draw to a complete close on 31 October.
Job Retention Bonus
During the summer economic update, Rishi Sunak announced the Job Retention Bonus – a £1,000 bonus for employers who bring back furloughed employees.
The bonus applies to:
- every employee who a company has previously claimed for under the scheme;
- who remains continuously employed through to 31 January 2021; and
- who earns at least £520 a month on average between the 1 November 2020 and 31 January 2021.
Employers will be able to claim the Job Retention Bonus through GOV.UK after they have filed PAYE for January. Payments will be made to employers from February 2021.
We expected more guidance to be published at GOV.UK by the end of September 2020. In the meantime, you can start to prepare your records in order to make an application by:
- ensuring your employee records are up-to-date (including accurate reporting of employee’s details and wages on the Full Payment Submission (FPS) through the Real Time Information (RTI) reporting system); and
- making sure all of your Coronavirus Job Retention Scheme claims have been accurately submitted and any necessary amendments have been notified to HMRC.
If you would like to speak to our team about your upcoming claims, please contact your usual relationship practitioner or email our dedicated CJRS team.