Coronavirus Job Retention
Scheme

Coronavirus Job Retention Scheme

The Government has introduced a coronavirus job retention scheme as a result of the coronavirus pandemic. Under the coronavirus job retention scheme, an employee is ‘furloughed’, which means that whilst the employee is not working, they remain on the employers books to be brought back when required. Moreover, under the scheme, the Government initially provided the employer with a grant under which 80% of furloughed employees’ wages were paid, up to a maximum of £2,500.00 per employee per month. The first grants under the coronavirus job retention scheme were paid at the end of April 2020, and any company regardless of size could access the scheme in relation to employees, including zero hours employees, so long as the employee was on the PAYE payroll on or before the 19th March 2020.

The coronavirus job retention scheme is due to last 19 months with effect from the 1st March 2020, until the 30th September 2021. However, from the 1st August 2020, employers were asked to contribute towards the salaries of their furloughed staff. The employers contribution was phased in, in 3 stages, as follows:-

• From the 1st August 2020, the taxpayers contribution remained at 80% of employees wages, but employers were required to pay the national insurance and employers pension contributions. On average, national insurance and employers pension contributions equate to approximately 5% of overall employment costs
• The taxpayers contribution fell from the 1st September 2020 to 70% of employees wages, with the employers contribution set at 10% plus payment of national insurance and employers pension contributions
• From the 1st October 2020, the taxpayers contribution fell to 60%, with the employers contribution rising to 20% plus payment of national insurance and employers pension contributions

Up until the 30th June 2020, an employer had to either place staff into complete furlough, in which case the employees do absolutely no work whatsoever (except for training, provided that training did not generate income or supply services for the employer), or they do not furlough their employees at all and keep them on full pay. From the 1st July 2020, employers were able to bring employees back part time whilst still remaining in furlough. Should the employer do that, then the employer would need to pay their employee 100% of their wages for those hours that they do work, whilst the grant under the job retention scheme would cover the employee for the remainder of their contracted hours at the aforementioned furlough rates.

The job retention scheme was to close for good on the 31st October 2020. Moreover, the scheme was to be closed to new entrants from the 30th June 2020. By the 30th June 2020, any potential new entrant must have been furloughed for at least 3 weeks, which meant that the final date an employee could be furloughed for the first time was the 10th June 2020.

Nevertheless, on the 5th November 2020, the Government announced that the coronavirus job retention scheme was being extended from the 31st October 2020 until the 31st March 2021. On the 17th December 2020, the scheme was extended again until the 30th April 2021. And then in the budget on the 3rd March 2021, the scheme was extended again until the 30th September 2021.

For the 8 months of the scheme up until the 30th June 2021, the payment structure reverted back to the position that applied between the 1st – 30th August 2020, in which the Government provided the employer with a grant under which 80% of furloughed employees’ wages are paid, up to a maximum of £2,500.00 per employee per month, but with employers required to pay the national insurance and employers pension contributions. Employers have the option to top up furlough payments should they so wish, the scheme had the flexibility of allowing employees to be on either full or part-time furlough (with 7 consecutive days being the minimum reporting and claim period), and the employee is not required to have been previously furloughed so long as they were on the employer’s UK payroll as at 30 October 2020 (2 March 2021 for periods starting on or after 1 May 2021).

For the final three months of the scheme (i.e. the 1st July 2021 – the 30th September 2021), the only change is that employers have to make a contribution of 10% for July 2021, and 20% for August – September 2021. 

For further information, you can read the Government’s guide.

The Government has also introduced a coronavirus statutory sick pay rebate scheme, under which employers can claim back employees’ coronavirus-related Statutory Sick Pay (SSP). 

Coronavirus: The Self-Employed

As well as the coronavirus job retention scheme, the Government has also set up a self-employment income support scheme under which the self-employed can apply for taxable grants. The self-employed are also eligible to apply online for Universal Credit and/or apply for Employment and Support Allowance if they have a disability or health condition which affects how much they can work.

The first grant was worth 80% of average monthly profits, and paid out as a single instalment covering 3 months of profits, which were capped at a total of £7,500.00. Those who wished to apply for the grant, had to have done so by the 13th July 2020.

It was later announced that the self-employed could also apply for a second taxable grant from the 1st August 2020, worth 70% of their average monthly trading profits, paid out in a single instalment covering 3 months profits, capped at a total amount of £6,750.00.

On the 5th November 2020, the Government announced that the self-employed could apply for a third grant worth 80% of average monthly trading profits, to be paid out in a single instalment covering 3 months’ worth of profits, and capped at a total of £7,500.00. The deadline by which to apply for the third grant is the 29th January 2021.

In the budget on the 3rd March 2021, it was announced that there would be a fourth round of grants covering the period February – April 2021, and a fifth and final grant covering the period May – July 2021. 

The fourth grant will again be worth 80% of average monthly trading profits, to be paid out in a single instalment covering 3 months’ worth of profits, and capped at a total of £7,500.00.

However, in relation to the fifth grant, the rules differ depending upon the extent to which turnover has fallen. For those whose turnover has fallen by 30% or more, they will again receive an 80% grant capped at £7,500.00. However, for those whose turnover has fallen by less than 30%, they will receive a 30% grant.