The federal government is making different adjustments to the Coronavirus Job Retention Scheme
UPDATED: The government has announced further changes to the Coronavirus Job Retention Scheme (CJRS).
The system, also known as leave, has been extended to the end of March, with workers on leave receiving 80 percent of their wages until January 2021. It will be checked at this point.
What happens when the vacation ends?
Rishi Sunak's previous plan was to end the vacation program on October 31st. Thereafter, employees returning to work were transferred to the less generous Job Support Scheme (JSS). JSS has been put on hold.
But now that the vacation program has been extended to the end of March, employees on leave remain under the job retention program, with the government paying up to 80 percent of staff wages (a maximum of £ 2,500 per month). Anyone discharged after September 23rd can be reinstated and reinstated.
Can you work on vacation?
No, employees cannot work for or on behalf of their employer during their vacation. Neither can they take on work that is related or connected to their employer. This includes providing services (including attending meetings) and generating income for the company.
Employees can study and train as long as it does not contribute to a business activity or generate income or take care of the business they have been on leave. However, if the employee has to complete the training, the employer must pay the national minimum wage, even if it is over 80 percent of his wage. This may result in employers being unable to reclaim the full amount paid to employees due to this training period. Volunteering is allowed even if arranged by the employer.
The vacation program so far
From July 1, employers can return employees on leave on a part-time basis. Individual companies determine the hours and shift patterns in which employees work when they return. Employers are responsible for paying these wages while on the job.
In the closely followed step, Chancellor Sunak will allow workers on leave to return on July 1 and work part-time. The Treasury Department will keep the old 80 percent system for those days when employees are back on vacation.
To enable the introduction of part-time leave, entitlements will be limited from July to employers currently using the system and to employees previously on leave.
The CJRS will be closed to newcomers on June 30th, with the last three-week vacation days prior to this beginning on June 10th.
The number of employees you apply for in July cannot exceed the number you applied for by June 30th. However, it may be different if you have an employee returning from statutory parental leave.
As of July, the minimum number of entitlement days is seven days as opposed to three weeks in the previous iteration of the system. The maximum number of CJRS claims is four per month.
The first time you can make a claim for July is July 1st. For periods ending on or before June 30th, the last day you can make a claim is July 31st.
From August 2020, the system will be weakened when employees return to work. The government will continue to pay 80 percent of salaries in June and July. In the months that follow, companies are asked to contribute a “modest share”, but people get 80 percent if they can't work yet.
The following applies to vacationers:
- June and July: The government pays 80 percent of wages up to a ceiling of £ 2,500, plus employer social security (ER NICS) and pension contributions. Employers are not required to pay anything.
- August: The government pays 80 percent of wages, up to a ceiling of £ 2,500. Employers pay ER-NICs and pension contributions – for the average entitlement this corresponds to 5 percent of the gross employment costs that the employer would have incurred if the employee had not been given leave.
- September: The government pays 70 percent of wages, up to a ceiling of £ 2,187.50. Employers pay ER-NICs and pension contributions and 10 percent of wages for a total of 80 percent up to a ceiling of £ 2,500. For the average entitlement, this corresponds to 14 percent of the gross employment costs that the employer would have incurred if the employee had not been given leave of absence.
- October: The government pays 60 percent of wages up to a ceiling of £ 1,875. Employers pay ER-NICs and pension contributions and 20 percent of wages for a total of 80 percent up to a ceiling of £ 2,500. For the average entitlement, this corresponds to 23 percent of the gross employment costs that the employer would have incurred if the employee had not been given leave of absence.
> See also: What the revamped vacation program means for your small business
Shops are starting to reopen this week, while venues and cinemas can reopen in July – assuming the government sees evidence of the coronavirus extinction.
How to wean businesses off the Coronavirus Job Retention Scheme, which currently costs the Treasury Department £ 6 billion a month, continues to be a headache for the Treasury Department. The program could cost more than a year than the NHS. The government was amazed at how enthusiastically employers and employees have embraced the program, which is currently about 50 percent of the population on vacation.
Organizations representing pubs and hotels, restaurants and others in the hospitality industry that were the last to reopen in the small business sector have argued that the job retention system for hospitality workers should be kept open indefinitely. However, Mr Sunak is reportedly not interested in sector-wise exemptions.
Edwin Morgan, director of policy, told the Telegraph, “If people can gradually get back to work, businesses can get back on their feet. As demand continues to decline across the economy and social distancing is a challenge for many businesses, the government needs to be agile with its support. "
The Coronavirus Job Retention Scheme is started
The government's Coronavirus Job Retention Scheme went live on Monday April 20. Small businesses could claim up to £ 2,500 per month for employee wages.
Employers can apply for direct cash grants via the new HMRC online portal. The money is expected to land in their bank accounts within six working days.
The job retention program, announced by Chancellor Rishi Sunak as part of a job and business protection support package, allows employers to apply for a cash grant of up to 80 percent of employee vacation wages, capped at £ 2,500 per month.
Up to 5,000 HMRC employees will manned phone lines and web chat services to answer any questions about the program, which runs through the end of June. HMRC has stated that it can handle 450,000 users per hour.
Last week the government extended the Coronavirus Job Retention Scheme (CRJS) to the end of June.
The program was originally supposed to run for three months to the end of May, but was extended in light of the announcement of the suspension extension on April 16. The CJRS pays the wage costs, which were deferred to March 1, 2020.
The government also announced that the program would now open to 200,000 more workers at risk of losing their jobs.
The Treasury Department said employees are now eligible to receive money under the system if they were on a small business's payroll on March 19, having previously set the February 28 deadline.
> See also: How to get the £ 10,000 Small Business Government Cash Grant
Chancellor Rishi Sunak announced the program, saying there was no limit to the cost of this job retention program, which was funded by the national debt.
On March 27, the government improved the CJRS offering by covering employers' social security contributions – which make up about 13.8 percent of the majority of a worker's wages – as well as minimum auto-enrollment contributions. The move could save companies an additional £ 300 per month per employee under the program.
However, Sir John Timpson, chairman of the Timpson shoe repair chain, has already called for the CJRS to be extended through September at a lower rate of 50 percent as stores are slow to reopen in the summer.
> See Also: Coronavirus – How To Manage Your Money If You Lose Your Job
How to access the Coronavirus Job Retention Scheme
You will need:
- Name affected employees as "employees on leave" and inform your employees about this change. The change in the status of employees is still subject to applicable labor law and can be negotiated depending on the employment contract
- Small businesses are required to classify employees as employees on leave, which means they shouldn't do any work for the company, including answering calls or emails, during vacation time
- Submit information on employees on leave and their income to HMRC through a new online portal (HMRC will provide further details on the information required).
Do companies have to increase wages by 20%?
No. An unintended consequence of the Chancellor's announcement last Friday was that many companies are still planning to lay off employees because they still believe they need to raise wages by 20 percent.
Companies should pay 80 percent of workers' wages up to £ 2,500 a month when they are on vacation, the Treasury Department says. Small business owners can claim this amount retrospectively. You should also deduct tax under PAYE as you normally would.
Of course, it is up to you whether you want to increase the gross £ 2,500 salary at your own discretion.
The big open problem is what happens to employers' social security contributions. This has not yet been decided.
How can I pay employee wages until May without cash flow?
Officials expect reimbursements under the Coronavirus Job Retention Scheme to flow into May from late April.
Until then, small companies have to pay their employees' wages themselves, often without any money flowing into the company.
Officials suggest two ways small businesses can do this:
- Use of the deferral of VAT payments for the quarter ending June 2020, which will not have to be paid until March 2021
- Using the Coronavirus Business Interruption Loan Scheme, which offers small businesses up to £ 5M without interest for 12 months
How companies should prepare – finances
- Set up payroll with a vacation element to determine the amounts to be reclaimed
- Calculate the vacation pay based on the 12 weeks until the end of February. Use regular base pay, but no overtime or bonuses
- For employees who were sick during these 12 weeks, the holiday pay is based on the amounts excluding sick pay
- Assuming this is still being paid for and PAYE taxes and NIC deductions are due
Applying for JRS – A Practical Guide
The accounting firm MHA Macintyre Hudson has created a 15-point action plan for small businesses that take employees on vacation and then want to make the following claims through the JRS:
- Identify those at risk and those scheduled for layoff
- Analysis of payment from the last 12 weeks to the end of February (estimated timeframe, government to confirm)
- Set a base salary that qualifies for an 80% grant
- Identify employees who are capped at £ 2,500
- Calculate the additional salary required to get to the “normal” salary
- Model options for managing top-ups outside of grant
- Identify the employees who are required to be employed
- Model options for flexible remuneration of workers not on leave, including setting a new base salary in line with national minimum wage and employment-related loans
- Start communicating with all affected employees, including illustrations of proposed payments
- Receive an employee / union buy-in
- Implement changes to payroll and payroll elements
- Prepare to apply to HMRC
- Register and log into the new HMRC portal (Timing TBC)
- Submit the required information to HMRC
- Reimbursed through new system
> See also: How do I apply for a Coronavirus Business Interruption Loan?
Sunak also announced that small businesses could defer VAT for the next quarter, a direct injection of £ 30 billion in cash flow support to SMEs.
Other announced measures include additional £ 7 billion support from the benefit system:
- Universal loan increase by £ 12,000 for one year
- Self-employed who lose their job and qualify for the minimum wage
- The next self-assessment payments have been postponed until 2021
Sunak said, "We will remember the little acts of kindness … the small company that does everything to protect its employees."
Prime Minister Boris Johnson added: “I know how badly businesses need the financial security we give.
"We will stand by you and do everything in our power to do this and assist you in ways the government has never done before."
Johnson also announced that all cafes, bars, pubs and restaurants, as well as nightclubs, theaters, gyms and leisure centers will close from midnight on March 20th.
The hospitality and entertainment sector closings are reviewed every month.
Grants can sometimes be combined with other forms of funding, e.g. B. banks, grant providers, Crowdfunding platforms and other lenders. In fact, we have partnered with FundingOptions.com to help you find the right funding for your business. You can find your page here.
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