On 29 May 2020 the Chancellor, Rishi Sunak, set out more information on how the Coronavirus Job Retention Scheme (the “CJRS”) will continue to operate, following the announcement of an extension of the scheme on 12 May 2020 (see here).
Deadline for new entrants
Crucially, Rishi Sunak announced that 10 June 2020 is the final date an employer is able to furlough an employee for the first time under the CJRS: Employees must have been furloughed for a full three-week period prior to 30 June 2020 in order for those individuals to be included in an employer’s claim under the new version of the CJRS which will apply from 1 July to 31 October.
Deadline for claims for period up to 30 June
Employers will have until 31st July 2020 to make any claims for a grant in respect of the period up to 30 June.
The Chancellor also announced that from 1 July 2020, employers can bring employees that have previously been furloughed back to work flexibly, while still being able to claim the CJRS grant for the normal hours they have not worked. The date from which ‘flexible furlough’ will apply is one month earlier than that originally proposed by the Chancellor in his statement on 12 May.
Further guidance on flexible furloughing and how employers should calculate claims will be published by the Chancellor on 12 June 2020.
Reduction of the grant
Another key point from the Chancellor’s announcement is that from August 2020, the level of the grant will be slowly tapered until 31 October 2020 (when the scheme ends). In addition to employers having to meet the full cost of the time staff spend working, the contribution made by Government towards the cost of ‘furloughed hours’ will reduce, by October, to a contribution of 60% of the individual’s pay (subject to a cap). The Government will also stop contributing towards employer National Insurance Contributions and pension contributions for the hours the employee does not work.
Consequences of incorrect CJRS claims
Also on 29 May, draft legislation was published which will give HMRC powers to recover CJRS payments to which recipients were not entitled or which have not been used to pay employees or meet the related pension, PAYE or NICs costs. HMRC will be able to do this by raising Income Tax assessments or requiring taxpayers to submit a Self-Assessment tax return, effectively treating ‘bad claims’ as an amount of underpaid tax. One consequence of treating CJRS claims in this manner is that the tax penalty regime can apply. Where errors with CJRS claims have been made, employers will have 30 days from Royal Assent of the Finance Bill (currently expected during July) to declare mistakes in order to prevent penalties from arising.