CJRS 2.0: Variable hours employees, making claims, and getting ready
It’s hardly surprising, given the reams of HMRC guidance and conflicting information on the definition of actual hours, that many AccountingWEB readers have been venting their frustration around how the revised Coronavirus Job Retention Scheme (CJRS 2.0) has been set up, labelling it a “complicated mess”.
We’ve considered CJRS 2.0 previously, taking guidance from our technical experts Kate Upcraft and Rebecca Benneyworth during last week’s Coronavirus response Q&A webinar and Helen Thornley, ATT technical officer, and Kirsty McGregor, founder of The Corporate Finance Network on Tuesday’s Any Answers Live webinar.
This article highlights more of your most asked questions from those two webinars.
The question of usual hours remains a headache, as there are conflicting sources of guidance as to how the calculation works. As the ICAEW has highlighted, there are currently three different answers to the question of what “Bob’s” usual working hours should be based on a 35-hour working week.
Although clarification is still needed from HMRC on this point, the below should help with CJRS 2.0 calculations (once the matter of usual hours is resolved).
How is the furlough claim calculated for variable hours employees who come back on flexi?
Thornley: For variable hours employees you look at what hours they worked in that same period last year and you also look at their average working hours over the 2019/20 tax year. You pick whichever gives them the best answer and works in their favour.
If they come back on flexi, you have your usual hours based on what they did previously, and you have the actual hours that they have worked, and the difference is what you furlough.
Upcraft: What is different under CJRS 2.0 is that whatever answer you choose for pay, you’ve got to use the same basis for hours. You can’t say we’ll have corresponding hours and average pay – there has to be a consistent approach to the two bits of the calculation.
If an employee normally works 20 hours per week, and that employee returns for 10 hours a week, does that mean we divide the weekly average furlough pay by half and claim that?
Thornley: Logic tells you that they’re only working 50% but actually, it depends on the claim period. For example, if that’s a monthly-paid employee and you’re doing a monthly claim, you won’t automatically get the answer you were expecting. I would always suggest you go through HMRC’s steps regardless. A lot of the time it will come out intuitively, but the times when it doesn’t, at least you know you’ve got it right.
What about zero-hours contract employees?
Thornley: They’re variable hour employees for the purposes of determining usual hours.
How do you treat straddling periods between months under CJRS 2.0?
Upcraft: Because they’re separate months, all the claims have to be separate. The July claims must be between the 1st July and 31st July, which means you can end up having to do lots of little claims to cover a calendar month if you’ve got weekly or four-weekly periods.
McGregor: We need to see CJRS 2.0 as split into mini-schemes, one for each month.
Can more than one claim a month be made?
Thornley: Yes! A claim should normally be for a minimum of seven days from 1 July. However, you do get these “orphan” periods as claims can’t cross calendar months from 1 July.
Upcraft: A claim can’t be for less than a week unless it’s for an “orphan” period, which is the end of a month or the beginning of a month.
Are you still able to submit claims up to 14 days in advance under CJRS 2.0 or do you need to wait until the claim period has finished before making a claim?
McGregor: Yes, you can claim up to 14 days in advance of your payroll, but just make sure that you know those are the final figures. You can wait until the scheme ends to put all your claims in as far as I’m aware, but it all comes down to cashflow.
What are the deadlines for making a claim under CJRS 1.0 and 2.0?
Claims under CJRS 1.0, which ends on 30 June, must be made by 31 July 2020.
As to a deadline for submitting CJRS 2.0 claims, Thornley’s and McGregor’s assumptions are that this is likely to be 30 November 2020 (i.e. one month after CJRS 2.0 finishes) but this is pending confirmation from HMRC.
How do you deal with employees returning from family-related / sick leave?
As Upcraft has previously noted, under CJRS 2.0 the number of employees that can be claimed for must not exceed the highest number of employees that were in any claim up to and including 30 June 2020.
However, there are exceptions, including employees returning from family-related leave after 10 June, even if you are furloughing them for the first time. Such employees are added to any previous maximum. Calculation of the furlough grant for these employees can be found here.
Note that this exception does not apply to those on sick leave.
What about National Minimum Wage and holiday pay?
Upcraft: We’ve got to make sure that the hours people are working are remunerated at least at the April National Minimum Wage. If you’re working, you’re back to your normal contract, unless you’ve had a contractual change that says your pay is changing.
[On holiday pay] Remember holiday pay is at normal pay, and normal pay changed as a calculation in April. So, where the rate of pay varies, we have to look back over 52 weeks to work out what that normal pay would be, discounting the furlough weeks and discounting holiday weeks. Also, we don’t look back 52 weeks in Northern Ireland because the law hasn’t changed, but we do in Great Britain.
Kirsty McGregor also shared some practical tips to help firms and their clients get ready for CJRS 2.0:
- Remind each client of the maximum number of employees they can claim for.
- Employees require a new written agreement from their employer that confirms the new furlough arrangement. Make sure that your clients, as employers, have such a letter in place. A template is available via Kirsty’s Twitter account.
- Come to practical arrangements with each client as to how they will take note of the hours their staff are working, and how and when those hours will be reported to you.
- Agree when you will submit clients’ claims.
- Revised furlough scheme from 1 July: What you need to know
- CJRS claim corrections
- Highlights from the Coronavirus response Q&As in April and June.
We’ll be answering more of your questions on CJRS 2.0 in our next Any Answers Live webinar at 9am on Tuesday 30 June. See you then!