Job Retention Scheme Update

Job Retention Scheme update - 11th November 2020

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REMINDER: PLEASE ENSURE YOU SUBMIT ANY CLAIMS FOR THE JOB RETENTION SCHEME TO 31st OCTOBER BY 30th NOVEMBER OR YOUR CLAIM WILL NOT BE PAID

Job Retention Bonus Scheme

Please also be aware the Job Retention Bonus scheme (£1,000 per employee) is currently suspended and the Chancellor will review any job retention incentives again next year.

Job Retention Scheme

The Chancellor announced an extension to the Job Retention Scheme (JRS) which will allow for flexible working hours with the employee being paid 80% of the reference salary and the employer being able to claim 80%.  The employer will however still be liable to pay the employer National Insurance and pension contributions along with the statutory deductions being made from the employee in respect of PAYE, NI etc.

Key Facts about the extended scheme, applicable from 1st November 2020:

  • You can make a claim if you cannot maintain your workforce due to your operations being affected by COVID-19.  This is a very important point as it must be due to the Coronavirus and you may be asked to provide proof of impact by HMRC at a later date.
  • From 1st November you can claim 80% of an employee’s usual salary for hours not worked to a maximum cap of £2,500 per month.
  • Employees do not need to have been previously furloughed so a clean slate from 1st November 2020, however they do need to have been on your payroll and reported via the real time submissions to HMRC on or before 30th October, with a real time submission being made between 20th March 2020 and 30th October notifying a payment of earnings for the employee(s) being claimed for.  There is no exception to this as in previous schemes.  Most employees will be covered as the 30th was a Friday so the last banking day in October and as long as you follow the usual rules of submitting a return on or before pay day then you should be fine.  If however, for whatever reason, you had an employee start in October but they won’t be paid until November then you will not be able to make a claim for that employee.
  • All employers with a UK bank account and a UK PAYE scheme can claim the grant.  Once again this isn’t a payroll return but a grant for monies to support your business due to it being impacted by COVID-19.
  • There are a number of scenarios for different types of workers e.g. apprentices, supply teachers etc. and these can be found here.  One point to pick up is around redundancies.  You must follow the normal rules for redundancy, but you can claim for an employee who is on furlough even if serving their statutory notice period, but you cannot use the grant to make the payment to the employee for any redundancy monies.  Please be aware the Government has reviewed this situation as at 14 November 2020 and under the new Direction, from 1st December you cannot claim for someone who is serving statutory or contractual notice.  If you made an employee redundant or they stopped working for you on or after 23rd September you can re-employ them and put them on furlough, but again they would have to have been on a RTI return before 23rd September 2020.
  • The same rules as before apply where an employer receives public funding i.e. if not fully funded then contact your sponsor to see whether you can claim or not.  Please note your payroll provider will not be able to confirm this for you.
  • You must agree with and notify your employees in writing if you intend to fully or part furlough them.  Records with these details, along with the hours worked and the hours not worked, need to be kept for a minimum of 5 years to allow HMRC to inspect them should they decide to do so.  The employee doesn’t need to provide a written response back to you.
  • During the hours the employee is not working for you, please note as in previous schemes they cannot undertake any work at all during this time, but can undertake training for which pay must be made and at least at current NMW levels.  You can do a retrospective agreement if you furloughed or part furloughed from 1st November, however you only have until 13th November to do this if you wish to make a claim for these dates.
  • A claim must be for a minimum of 7 calendar days, however the guidance states, as in previous schemes, where odd days at the start or end of a month you can claim.  You can only make one claim for your PAYE scheme, so for example where your payrolls overlap with different dates you will need to combine them into one claim.  Where you submit more than one claim in a month they must not overlap i.e. you pay 11th to 10th of the next month you will need to do one claim from 1st to 10th November, then 11th to 30th November and then another from 1st to 10th December and so on.  You will need to ensure you know the actual hours an employee is going to work for payroll purposes and for the claim, as if you make a claim that is later incorrect you will need to inform HMRC and repay monies back if over claimed.

Claim deadline dates

The deadlines for claims have changed in this new scheme as follows:

Claim for furlough days in

Claim must be submitted by

November 2020

14 December 2020

December 2020

14 January 2021

January 2021

15 February 2021

February 2021

15 March 2021

March 2021

14 April 2021

  • HMRC may accept a late claim but only with a reasonable excuse, so best to avoid being late.  Armstrong Watson will not be able to submit an appeal for you, you would need to do this directly with HMRC.  HMRC will not consider any reasonable excuses in advance of the deadline.
  • Employees can take holiday whilst on furlough and where they are flexibly furloughed the hours taken as holiday should be counted as non-worked hours rather than worked hours.  However, as before you cannot place an employee on furlough due to them being on holiday in that period and make a claim.  If the employee would normally work a bank holiday then the employer can agree for this to be included in the grant payment.  Where the employee usually takes the bank holiday as leave, then the employer will either need to top up their usual holiday pay or provide a day off in lieu.
  • HMRC will be publishing the names of companies and LLPs along with their registration number for all those who submit claims from December onwards.
  • HMRC has provided a revised calculator.
  • If you are submitting a claim for more than 100 employees HMRC recommends you use their template to ensure your claim is processed efficiently, so please do not use the Armstrong Watson template for the submission process but instead transfer any data to HMRC’s template.

Please note: where Armstrong Watson has been engaged to complete your JRS submission, please note that we will require your information 3 working days prior to each HMRC deadline date. If it is received after this time then we will still endeavour to complete the submission on time, but we cannot guarantee this due to the large volumes anticipated under this scheme

Download our CJRS templates

Click here to access and download our weekly and monthly templates.

What can you claim?

Your first step is to decide what length of claim you wish to make.  The template provided by Armstrong Watson allows you to enter the dates of the claim period and the dates for your pay period.  It will then ensure all the calculations are worked out on the correct number of claim days, or you can use HMRC’s calculator.

Reference pay

  • Where the employee has been previously furloughed before 31st October 2020 then you will continue to follow the same rules as in JRS2, this also applies to anyone who was on your payroll as at 19th March and you reported and made payments to them in the 2019/20 tax year.  Therefore if a fixed salary worker, their pay will be that prior to 19th March 2020, you can include non-discretionary payments such as overtime, but you must be obliged to pay these monies.  Then you will pay a minimum of 80% for the hours not worked up to the cap.  Where hours are worked then the usual National Minimum Wage and National Living Wage rules apply. If you include overtime and this has a significant impact on what their pay would be for the purposes of the 80% claim, HMRC advises you should use the variable pay method.
  • If the employee started after 19th March and therefore has not been previously claimed for as a fixed rate worker, you need to look at the last pay period ending on or before 30th October for their reference salary. 
  • Where employees who have been previously furloughed and work variable hours and therefore their pay varies, it is the same rules as for JRS2;
    • You look at the higher of either the total wages earned in the same period in the previous tax year i.e. November 2020 you would look at November 2019, then you look at the total pay in the 2019/20 tax year and in this case you would divide by 12 and whichever is highest you would pay 80% up to the £2,500 cap for hours not worked.
    • Where they work variable hours and receive variable pay and were not on a previous claim, you should calculate the 80% on the average wages payable between 6th April 2020 or later if the employment commenced after this date and to 1st November 2020.
  • There are lots of examples for different scenarios on HMRC’s website and they can be found here.
  • The next step where flexible furlough is in place is to work out their usual hours. Where they are fully furloughed so not working any hours you do not need to do this step.

If a fixed employee and is furloughed for the full claim period:

  • Where employed prior to 19th March 2020 and you previously made a claim you will use their usual contracted hours for that period, all other employees their reference period will be their last pay period ending on or before 30th October 2020.  These employees will only be eligible for claims from 1st November 2020.
  • Example: a person normally works 37.5 hours per week.  The claim period is 1st November to 30th November and their pay period is the same.  You must include non-working days, so 7 days a week regardless of whether they would normally just work 5 days a week.
  • Pay £2,000 per month, 37.5 hours per week / 7 calendar days x 30 days in pay period = 160.7142 round up or down to the nearest whole number so this would be 161 usual hours.  If the person worked 60 hours in November your claim would be:
    • Usual hours 161, less 60 worked hours, so 101 non-worked hours (furlough)
    • £2,000 / 30 days in claim period x 30 days in pay period = £2,000
    • £2,000 / 161 usual hours x 101 non-worked hours x 80% = £1,003.73 to pay and to claim
  • The Armstrong Watson template has a calculator you can use to enter the usual weekly hours and it will work out the usual hours in the claim period as long as the correct dates are entered.
  • Where you have an employee who works variable hours, the basis of calculation is the same as it is for the pay:

  • You take the highest of either the average hours or the actual hours worked in the same period last year;  an example:
  • November 2020 you would look at the total hours worked (including annual leave paid and any non-discretionary overtime where you include) and compare this to November 2019.
  • You then take the average across the tax year and divide it by 12 (monthly, would be 52 if weekly paid) and whichever is higher you would use this.  You wouldn’t need to use the calculator as you will know the actual usual hours for the claim period.  Where you didn’t make a claim you will need to work out the hours from 6th April 2020 up to the first day spent on furlough on or after 1st November.  The payroll team should be able to supply a report that is date driven that will show you what was paid between two periods and the hours paid (where variable) and you can use this to work out the variable pay and hours. Examples can be found here.
  • Please note if your employee returns from furlough part way through a period, you should work out the usual hours based on the start and end of that period in the claim and not the full claim period.  The Armstrong Watson template will not be able to do this for you as it will work on the claim period and not individual claim periods, therefore you would need to do this manually.
  • HMRC has provided comprehensive examples for calculations and these can be found here.

For more guidance on JRS or related issues, please email help@armstrongwatson.co.uk or call 0808 144 5575.

Download our handy JRS Scheme Templates