What do the changes to the Coronavirus Job Retention Scheme mean for my firm?

Chancellor Rishi Sunak recently announced the latest updates to the Coronavirus Job Retention Scheme (CJRS). The key change is that businesses are now encouraged to bring back employees to work part-time from 1 July 2020. This was originally planned for August.

Whether furloughed employees return part-time or not, the government will continue to pay 80% of wages throughout June and July 2020. This includes National Insurance Contributions (NICs) and pension contributions.

However, from August to October, the amount of government support for employers will be gradually reduced each month and businesses will be asked to contribute what the government describes as a ‘modest share’ towards the wage bill. The government hasn’t announced what this share will be yet.

The CRJS will close to new entrants from 30 June. After that, employers will only be able to furlough employees who’ve already been furloughed for the full three weeks prior to 30 June.

The changes, which will be phased in between now and October, are as follows:

Changes from August 2020

From 1 August 2020, the level of government support available through the CJRS will be reduced. While the government will continue to pay 80% of staff wages, employers will be responsible for paying employer NICs and pension contributions at the usual rate (3% for employers and 5% for employees). Employers will no longer be able to claim a grant for up to the statutory minimum automatic enrolment (AE) employer contribution. 

Changes from September 2020

From 1 September 2020, the government will cover 70% of wages up to a cap of £2,187.50, with employers asked to pay the remaining 10% of wages up to a cap of £2,500, plus employer NICs and pension contributions at the usual rate (3% for employers and 5% for employees).

Changes from October 2020

From 1 October 2020, the government will cover 60% of wages up to a cap of £1,875, with employers asked to pay the remaining 20% of wages up to a cap of £2,500, plus employer NICs and pension contributions at the usual rate (3% for employers and 5% for employees).

The scheme is still due to come to an end on 31 October 2020, as planned.

How does re-enrolment work during COVID-19?

Some companies and organisations are carrying out their first re-enrolment of employees during the coronavirus pandemic.

The Pensions Regulator (TPR) will write to you explaining how to carry out your re-enrolment duties and complete your re-declaration of compliance. TPR recommends that you assess your staff for re-enrolment on the third anniversary of your staging date or duties start date.

Please note, you can’t use postponement at re-enrolment. However, you can choose three months either side of your third-year anniversary date as your re-enrolment date. This may give you flexibility if the pandemic is making it difficult to complete your re-enrolment duties.

For example, if your staging date or duties start date was 1 September 2017, your re-enrolment date will be 1 September 2020. You can  choose to start your duties three  months before or after 1 September 2020.

You can check TPR’s re-enrolment date tool to see your available dates.

You can find out the latest information from TPR here. 

 

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