Employers must ensure that the agreement is consistent with employment, equality and discrimination laws, they must keep a written record of the agreement for five years and also keep records of how many hours their employees work, and also the number of hours they are furloughed for, for a minimum of six years. There is no requirement, however, for employees to provide a written response. The terms of any agreement must accurately reflect the hours an employee has actually worked or has not worked over the period of the agreement. The agreement must also allow the employer to satisfy the terms of CJRS enabling them to make a claim in relation to any hours not worked. Flexible furlough or furlough agreements made retrospectively, with effect from 1 November 2020, are valid for the purposes of CJRS claims, as long as they are made in accordance with the conditions above. Only retrospective agreements implemented up to and including 13 November 2020 can be relied on for the purposes of a CJRS claim.
Calculations
The policy paper provides details of calculations for CJRS claims for periods starting on or after 1 November 2020. There is a reminder that claims up to and including 31 October 2020 must be submitted by no later than 30 November 2020. Employees included on an RTI submission or, or prior to, 19 March 2020, will be able to use the CJRS calculations as applied in August 2020 for reference pay and usual hours. If, however, an employee was hired between 10 March 2020 and 30 October 2020, then the CJRS methodology will update the reference pay and usual hours to account for the period covered by the extension. Any employees on fixed pay who were employed on, or following, 20 March 2020, will have the last pay period prior to 30 October 2020 used as the basis for the calculation. Any employees on variable pay or hours, who were employed after 20 March 2020, will have the average of tax year 2020-21 used as the basis for the calculation.
Previously eligible employees
For any employees who were eligible under the original CJRS, the existing calculation of 80% of usual wages and hours will apply, even in scenarios where a claim was not made in respect of those employees under CJRS to 31 October 2020.
If an employee was not previously eligible for the scheme, then the calculation takes account of updated reference periods. Further guidance on the calculation will be issued on 10 November 2020.
For claims relating to the dates between 1 November 2020 and 31 January 2021, employers will be entitled to claim a grant for 80% of usual wages, up to a maximum of £2,500 per month for the time that the employee spends on furlough. Employers are required to pay their employees for the time worked and the Government grant for time not worked, they will need to operate PAYE on behalf of their employees and they must pay the employer NI and pension contributions for employees on the full amount that they pay to employees.
Employers are able to top up employee wages above the 80% if they wish, but this is not mandatory, and would be at the employer’s own expense.
Reference pay: calculating 80% of wages
For employees who were not previously eligible for CJRS, 80% of wages should be calculated as follows:
• Fixed salary – 80% of wages payable in the last pay period ending on, or before, 30 October 2020 • Variable pay – 80% of the average pay between the start date of employment or 6 April 2021 (whichever is later) and the day before their CJRS extension furlough period begins
80% of wages is capped at the maximum wage amount, which is calculated in the same way as it was under the initial CJRS.
Usual hours for an employee with a fixed number of hours, where pay does not vary on the basis of the number of hours worked
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
Page 246 of 590
Made with FlippingBook - Online magazine maker