Chancellor Rishi Sunak has announced further changes to the Coronavirus Job Retention Scheme (“CJRS”) within his Budget on 3 March 2021.
The CJRS, also known as the “furlough scheme” has been extended until 30 September 2021. The scheme pays 80% of employee’s wages for the hours they cannot work during the pandemic. This has previously been extended on a number of occasions, most recently until 30 April 2021.
For periods ending on or before 30 April 2021 you can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE Real Time Information (“RTI”) submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before the 30 October 2020 to claim.
For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as you have made a RTI submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before the 2 March 2021 to claim for periods starting on or after 1 May 2021.
For periods ending on or before 30 June 2021 you can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. From 1 July 2021, the level of grant will be reduced each month and you will be asked to contribute towards the cost of your furloughed employees’ wages. From 1 July, the level of the grant will be reduced, with the government then paying 70% of usual wages for hours not worked up to a cap of £2,187.50, with employers covering the remaining 10%. From 1 August, the government will pay 60% of usual wages for hours not worked up to £1,875, with employers covering the remaining 20%.
Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.
Remember, employers should discuss with their employees and make any changes to their contract by agreement.
Employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. You must:
• make sure that the agreement is consistent with employment, equality and discrimination laws;
• keep a written record of the agreement for five years; and
• keep records of how many hours your employees work and the number of hours they are furloughed (such as, not working).
The employee does not have to provide a written response and you do not need to place all your employees on furlough.
At the Budget, it was confirmed that the fourth self-employment income support scheme (SEISS) grant will be set at 80% of 3 months’ average trading profits, paid out in a single instalment, capped at £7,500. The fourth grant will take into account 2019 to 2020 tax returns and will be open to those who became self-employed in tax year 2019 to 2020.
Eligibility for the scheme will now be based on the submitted 2019 to 2020 tax return. This may also affect the amount of the fourth grant which could be higher or lower than previous grants that may have been received.
Self-employed individuals will be required to declare that:
• they intend to continue to trade; and
• they reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus.
There will be a fifth and final SEISS grant to cover May through to September 2021. Self-employed individuals will be able to claim from late July if they are eligible.
The amount t will be determined by how much turnover has been reduced in the year April 2020 to April 2021.
The fifth grant will be worth:
• 80% of 3 months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more; or
• 30% of 3 months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%.
Further details will be provided in due course.
National Living Wage – Significant Change
The National Living Wage (NLW) usually applies to those aged 25 and over, and National Minimum Wage (NMW) applies to those of at least school leaving age. As of 1 April 2021, the NLW will apply to all aged 23 and over. The following rates will apply:
• 23 and over – £8.91
• 21-22 – £8.36
• 18-20 – £6.56
• Under 18 – £4.62
• Apprentice (in their first year) – £4.30
If you need any advice or assistance with any of the above issues, including drafting furlough/flexible furlough agreements, letters to employees to arrange holidays whilst on furlough or a document and policy health check to make sure you are compliant with current changes, then please do not hesitate to contact Sarah Collier, Partner & Head of Employment.