Employer Update Covid-19
Following the recent Summer Statement, we find ourselves with several changes to the current Covid-19 Job Retention Scheme and new ideas to encourage employers to retain their current employees and create new jobs.
Coronavirus Job Retention Scheme (CJRS)
The current CJRS, which is in place for those employers who have furloughed employees, is due to finish at the end of October 2020. However, between now and then there are a few changes that should be taken into consideration:
- The scheme is now closed to any new employees, so if your employees were not furloughed for at least three consecutive weeks between 1 March 2020 and 30 June 2020, ending on or before 30 June 2020, they are not eligible for the extended scheme which covers 1 July to 30 October. All claims relating to periods ending on or before 30 June must be submitted by 31 July.
- Up until the 30 June, if you have furloughed an employee they will have not been able to undertake any work for you. However, from 1 July you can begin to bring furloughed employees back to work for any amount of time and any work pattern whilst claiming the grant to the difference between their usual working hours and the hours they have worked. For those employers who are just beginning to get back into their usual business operations, this flexibility will be key to enabling rotation of employees and also ensuring they have the correct balance between the work available and the employees available. Therefore if you are a seasonable business you may only have work on a weekend for changeovers but perhaps not all week.
- From 1 August you will no longer be able to claim to cover the cost of the employer National Insurance contributions and pension contributions, instead you, as the employer, will have to pay these as before. These payments will be based upon the full amount, e.g. the furlough and the working amount and not just calculated on the worked hours.
- This grant will gradually decrease after the end of August however employers must ensure that their employees still receive 80% of their normal wages or cap of £2,500 which they would have received up until 31 August so the employer will need to pay the difference.
- The scheme will cease at the end of October, when employers are being incentivised to bring back and keep their furloughed employees with the recent announcement of the Job Retention Bonus. This is a one-off payment of £1,000 to UK employers for every furloughed employee who is continuously employed up until the end of January 2021. To qualify the employee must be being paid at or above the lower earnings limit of £520 per month for the 2020/21 tax year. Employers will receive this one-off payment from February 2021.
Grant and cap
Up until 31 August
80% of wages up to £2,500 for the hours the employee is on furlough
70% of the wages up to £2,187.50 for the hours the employee is on furlough
60% of the wages up to £1,875 for the hours the employee is on furlough
High levels of unemployment are a worry for the Government following the pandemic, particularly for those aged 25 and under who are just leaving education and looking for employment. To encourage employers to take on new apprentices, the Government are offering the following incentives between the period 1 August 2020 and 31 January 2021:
- £2,000 for every new apprentice aged between 16 and 24
- £1,500 for every new apprentice aged 25 and over
This is in addition to the £1,000 payment employees currently receive for new 16 – 18 year old apprentices and anyone aged under 25 with an Education, Health and Care Plan.
Claims can be made for these employees via the apprenticeship services from 1 September 2020. The payment will be made in two separate installments of equal figures as long as the apprentice is still in the learning environment at day 90 and at day 365. There is no limit to the number of payments each employer can receive providing the apprentices meet the required criteria.
To be eligible the apprentice must be a new employee and supplied with a contract of employment with a start date between 1 August 2020 and 31 January 2021 and not been previously employed with the same employer within six months up to the contract start date. For example, employers taking school leavers through an apprenticeship scheme at the local agricultural college will be able to take advantage of this apprenticeship payment.
Traineeships are a period of work placement lasting from 6 weeks to 6 months and employers are not obliged to pay the trainee for the period of the work placement. Employers who offer trainees’ work experience under the traineeship scheme will be given a payment of £1,000 per trainee. This may not be particularly applicable to your industry but it is worthwhile being aware of.
The Kickstart scheme has been launched to protect employment and generate more jobs. This scheme is to encourage employers to create jobs for individuals aged between 16 and 24 who are on Universal Credit and are potentially at the greatest risk of long-term unemployment. The jobs that employers will need to offer will be six-month placements and the Government will fund 100% of the following up to a maximum of £6,500:
- National Minimum Wage (NMW) rate for 25 hours per week
- Employers national insurance contributions
- Employer minimum automatic enrollment contributions
The scheme will open for applications in August and currently will run until December 2021 however there is a possibility that this will be extended. Therefore if over the next year or so you would like to give an opportunity to a young person in perhaps your busy six month period of the year, this would be a great way of encouraging someone to actively work and learn new skills.
Overall this is a very exciting announcement for employers, although for those businesses who have remained relatively unaffected by Covid-19 and do not intend on employing any new starters, this may not have any use. Those who are planning on taking on new recruits over the next year, it is important to take note of the schemes detailed above as it may create opportunities for your business and potential recruits which you would not have otherwise considered.
If you have any queries or would like to discuss any of the above further then please do not hesitate to contact me.
The content of this article is for general information only and does not constitute tax advice. It should not be relied upon and action which could affect your business should not be taken without appropriate professional advice.
Alice Gay ACCA ACIPP
Alice joined Evolution ABS in July 2013 after completing her A Levels at the Woodroffe School. She has completed her AAT with Richard Huish College, and was nominated for higher apprentice of the year in Somerset and finished in the top 3. Alice has passed all of her ACCA exams and officially qualified in May 2018, since this, Alice has now completed her Payroll Technician Certificate and oversees our payroll department.
In her spare time she is an active member of Axminster Young Farmers, and enjoys riding her horse and walking her dog. She lives at home with her family who have a dairy farm in East Devon and enjoys being outside in the countryside whenever possible.