The details relating to the adjusted Coronavirus Job Retention Scheme where employers can bring their employees back on a reduced hours basis while still claiming some funding for salary were confirmed last week.
This adjusted scheme will begin on 01 July 2020 (see my previous blog on other significant dates and announcements that employers need to be aware of). From this date, businesses who have some work but not sufficient to utilise all contracted hours can ask employees to work for some of their contracted hours but not all.
The employer will pay the employee at their normal rate of pay for any hours worked and then can claim the remaining hours not worked back under the scheme. Hours not worked can be referred to as furlough-time.
The amount that can be claimed remains at 80% of the employee would have received under their normal contract for any furlough-time for July. In August, it will remain at 80% but employers will have to fund National Insurance and pensions costs. In September, it reduces to 70% with the employer topping up furlough-time wages by 10% and then it will reduce again during October to 60% with employers covering the remaining 20% of furlough-time wages. The scheme will cease in November.
As with any aspect of furlough, employers should seek to get agreement from their employees to make any necessary changes to the already agreed furlough arrangements and it is really important to ensure that no work is carried out during furlough-time. This is harder to police than when employees were on full time furlough. It's easy to imagine that a well-meaning employee might just do a few extra hours to get a job done. Employers need to be really clear that this cannot happen and need to be sure that people managers understand the risks of turning a blind eye or even encouraging it to happen.
The government have confirmed that they are going to give HMRC draconian powers to deal with any employers who are found to have been abusing the scheme including it a 100 per cent tax rate on the payments falsely claimed. Failure to pay this could result in criminal prosecution.
New legislation will give businesses 30 days from 31 October 2020 to self-report and repay any claiming errors made without any penalties. After this point, HMRC will investigate any suspected errors with the burden of proof being on the employer.
In preparation for this, employers need to make sure they keep the following records for 6 years:
the amount claimed and claim period for each employee the claim reference number for their records
their calculations in case HMRC need more information about their claim
usual hours worked and the number of hours they are furloughed (i.e. not working), including any calculations that were required, for employees they flexibly furloughed
actual hours worked for employees they flexibly furloughed
any claim adjustment/ correction notified to HMRC in the event of error
While this adjustment to the scheme is very positive news for many businesses, the claiming process and ensuring that no work is carried during furlough time could be fraught with danger.
Anecdotally, it appears as if a lot of people are desperate to get back to some work and many businesses are gearing up to take advantage of this adjusted scheme. Remember that all work will need to be risk assessed and it is a good idea to brief all of the people you are bringing back to work on the measures you have taken to mitigate risks.
If any small business needs help to get their people back to work either using the adjusted scheme or to full working hours, get in touch with 2020 HR.
