Coronavirus Job Retention Scheme in the UK guide by Initor Global UK

Coronavirus New Job Retention Scheme in the UK guide by Initor Global UK

The fight against the COVID-19 pandemic intensified yet again with the UK having to persist with extended nation-wide lockdown recently, as the discovery of more infectious Coronavirus strains in the country has tested the willpower of the nation. This has led to the government introducing various relief measures to ease the lives of the citizens affected by the pandemic.

As a result, in November 2020, the government authorities had declared an extension of some major assistance programmes such as the Coronavirus Job Retention Scheme (CJRS). At that time, it was announced that the job retention scheme would be extended till 31st March 2021.

However, again in mid-December, the government has increased the period of extension for CJRS to 30 April 2021. What does the job retention plan’s extension have in store for the numerous employers and employees in the UK who desire to benefit from it? A number of guidance documents have been published by HMRC and BEIS to explain the Scheme and how to make a claim. Let’s have a look with a step-by-step brief:

A Summary of the Prominent Aspects of the Coronavirus New Job Retention Scheme

The extended Coronavirus Job Retention Scheme has the following highlights:

  • The scheme allows employees to be furloughed flexibly to work on a part-time basis and receive regular payment for part-time work. While they shall get 80 percent of the prevailing wages, furlough pays for the hours not worked. An employee can receive a furlough pay up to a maximum of £2,500 in a given month.
  • The employers who benefit from CJRS are allowed to claim 80 percent of the employee salary paid for the government’s unworked duration. However, the compensation claim will not include the employer’s contributions towards Pension Contributions and National Insurance Contributions of his employees.
  • The Coronavirus Job Retention Scheme is available for furloughing employees who have childcare duties or are shielding themselves or a family member, as per public health guidelines.
  • The claims that an employer makes must start and end in the same given month. The claims must be for at least seven consecutive days unless the claims are relevant for a shorter period at the beginning or end of a given month.

Main Points About the Latest Revised Version of the Coronavirus New Job Retention Scheme

After successive extensions in the Coronavirus Job Retention Scheme, we can say that it now has around three versions since its original declaration in March 2020. Version 1, from March 2020 to June 2020, Version 2, from July 2020 to October 2020, and now Version 3 from November 2020 to April 2021.

Here, we are enlisting some important pointers related to the Coronavirus Job Retention Scheme 3.0:

  • The scheme will function till 30 April 2021. The operation of the plan will stay similar to version 2 of CJRS. The government will continue to pay the employers a maximum of 80 percent of their employees’ regular pay, subject to the limit of £2500 per month. The government shall, however, not offer payment for the National Insurance and Pension contributions of employers.

The option to top up the employee wages can be availed of by the employer. However, they will have to pay the increased amount from their own pockets.

  • There is no threshold limit on the maximum number of employees for which the employer can claim furlough payment from the government from 1 November 2020.
  • As per the revised scheme guidelines, employers can continue to furlough employees who cannot work as they have the maximum risk of fatal illness from the coronavirus infection or those who have childcare responsibilities.
  • It is crucial to note that only the employers and employees who did not use the previous versions of the job retention scheme can apply for the extended scheme 3.0. It stands in stark contrast to the first version of the CJRS, which allowed considerable employees to be furloughed for at least three successive weeks before 30 June 2020. They were then allowed to access the continued version of the retention scheme from July to October 2020.
  • The scheme is available for a new employer concerning employees transferred from a previous business entity if the PAYE business succession rules are in effect. The employees in consideration must be employed by a preceding employer who had made claims as per CJRS before 30 October 2020. In such cases, the transfer of the employees to the new employer must have been made before 1 September 2020.
  • The scheme can pose an issue for the business entities considering re-instating employees to claim the furlough payment. Employers are not eligible to file claims for employees who are working under contractual notice from the period starting on or after 1 December 2020. The non-eligibility applies to all employees who gave a resignation and served notice before 1 December.

Important Eligibility Conditions related to Employees who can be covered under the Latest CJRS

Employers can claim furlough payment from the government for making wage payments of employees who were employed as per their PAYE payroll on 30 October 2020. The employer should have a Real-Time Information submission as per PAYE to the HMRC during the period between 20 March to 30 October 2020, stating that the wages were paid for the relevant employees.

The previously working employees on or before 23 September 2020 who got retrenched later can be re-employed, and a claim can be filed for payments made to them. This relief applies  to employees working under fixed-term contracts, and their contracts ended after 23 September 2020. The employers can claim payment of furlough wages to such contract workers provided they meet the eligibility conditions.

Availability of Flexible Furloughing for the Business Entities

Employers can continue to use the benefit of flexible furloughing. Apart from the full-time furloughing of employees, wherever necessary,  employees will remain eligible to work on a part-time basis and get furlough payment for the hours not worked. Calculation of the working hours will be in line with the guidelines for the original CJRS.

Entering into Retrospective Agreements

As per the declaration and guidelines of the extended CJRS scheme, employers can enter into furlough arrangements with their employees retrospectively from 1 November 2020. The government authorities have clarified that just those retrospective agreements that were entered into till 13 November 2020 shall be considered for the claims under the Coronavirus Job Retention Scheme 3.0. Employers will need to maintain proper documentation of the agreements with their employees for the next 5 years. They will also have to retain a due report of the number of hours employees actually worked and the number of unworked hours for which they received furlough payments for the following 6 years. The authorities may review these documents at any point of time of the future.

Employers need to duly consider the essential changes in the extended scheme

All business owners in the UK, must properly assess the pros and cons of the Coronavirus Job Retention Scheme and make their decisions accordingly. They must consider taking professional assistance in case of any ambiguities.

Get the right support from the top finance and accounting outsourcing company in the UK

Initor Global UK stands in full support of all the accounting firms and CAs who may find it difficult to mitigate the needs of their clientele amidst the strenuous situation. We can extend reliable assistance to handle your accounting, payroll, and tax needs. Contact our team today!

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