Important Updates to the CJRS That Affect Every Employer
25th Jun 2020
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The furlough scheme has evolved over the last number of months with more changes being rolled out in the coming months. Payroll bureaus and their clients will need to start planning ahead and make efforts to understand how these changes will affect their business. The good news is that the government has reshaped the Coronavirus Job Retention Scheme to become more flexible with part-time furloughing of employees now being permitted.
To be eligible for the CJRS scheme, furloughed employees must have been on your PAYE payroll on the 19th of March 2020. This means that you will need to have made an RTI submission notifying HMRC of a payment to the employee on or before the 19th of March 2020.
The scheme was originally available for four months starting from the 1st of March 2020, but this has since been extended until the end of October.
CJRS Changes Effective from August
From August, employers will have to start contributing to the wage costs of paying their furloughed staff, and this employer contribution will gradually increase in September and October.
In August, the government will continue to pay 80% of wages up to a cap of £2,500, but employers will be required to pay employer National Insurance contributions and employer pension contributions. For the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed.
From September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will need to pay employer NI and pension contributions plus 10% of wages to make up 80% of the total, up to a cap of £2,500.
Finally, in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will need to pay employer NI and pension contributions plus 20% of wages to make up 80% of the total, up to a cap of £2,500.
After the 31st of October, the government contributions will finish and the scheme will come to an end.