Coronavirus Job Retention Scheme extended
The Chancellor, Rishi Sunak, announced on 12 May that the Coronavirus Job Retention Scheme would be extended until 31 October 2020. The scheme enables employers adversely affected by the COVID-19 pandemic to furlough staff rather than making them redundant, and to claim a grant from the Government for 80% of their wages up to £2,500 a month. It was due to finish at the end of June. It will now continue in its current form until 31 July 2020, with changes being made from August as part of the gradual withdrawal of the scheme.
As at 17 May 2020, 8 million jobs had been furloughed by 986,000 employers who had, in total, claimed grants totally £11.1 billion.
In its current form, employers can furlough staff and claim a grant from the Government for 80% of the furloughed employee’s wages, capped at £2,500 a month. The grants, which must be paid over in full to the employee, are liable to tax and National Insurance as usual, and must be reported to HMRC as normal under Real Time Information. However, the employer can claim the associated employer’s National Insurance, together with minimum employer contributions where these are due under auto-enrolment, from the Government as part of the grant.
Employers can only claim a grant if the employee is furloughed for a minimum of three weeks. Employees are not currently allowed to undertake work for their employer while on furlough (although they can work for someone else if their contract allows).
Changes from August
Support provided under the scheme is to be withdrawn gradually. While the scheme will continue to be available for a further three months from 1 August, employers will have the flexibility to bring furloughed employees back part time from that date. Employees will continue to receive 80% of their salary (capped at £2,500 a month), but employers will be required to meet some of the cost. The Government are to publish more details of how the scheme will operate from 1 August 2020 to 31 October 2020.
Guidance on the operation of the scheme can be found on the Gov.uk website. Speak to us to find out how you can use the scheme to help you maintain your workforce during the pandemic.