The next steps after Furlough ends
Posted on 9th October 2020 at 15:21
The past 6 months has been turbulent, whatever industry you are in. According to HMRC data, at least 9.4 million workers have been furloughed; more than a quarter of the UK’s entire labour market.
The scheme was designed to support employers and employees to retain staff during the pandemic until economic conditions became more stable.
But the cost of the scheme is huge, already estimated at 14bn per month. So like all good things, it has to come to an end.
If your business has had to furlough staff, then now is the time to consider the next 6 months and your staffing needs.
As a business owner you may have to make tough decisions. Cineworld have just decided to close and make all staff redundant. A hard decision but it seems it was not done with close consultation with their staff, many of whom found out via social media.
October is the last month of Furlough
We are now in the final month of Furlough which ends on 31st October 2020 and the job support scheme replaces Furlough.
From 1st -31st October 2020 the Government will pay 60% of salary for furloughed staff. You must pay the additional 20% of salary (maximum total £2,500 per month).
Please note, you must pay this additional 20%, even if your employee agrees not to take it.
Staffing review -The first step is to look at every single job role in your business, your levels of income and you will also need to do some predications.
Outsourcing - Some roles, hard as it is, to make people redundant could be outsourced. At this stage this is about saving your business. You must make tough and uncomfortable decisions to survive.
Consider reducing hours -With consultation with your staff it may be possible to reduce their hours for a limited period.
Get expert help - Make sure whatever you decide you need to do you are compliant with Employment Law and you consult with you staff. Talk to an expert in Employment Law otherwise you could end up with a costly tribunal case.
You may find this link to ACAS useful https://www.acas.org.uk/coronavirus
Job retention bonus
The Job Retention Bonus scheme is intended to support employers who retain their furloughed employees after the CJRS ends on 31 October 2020.
You cannot claim the Job Retention Bonus until 15 February 2021. This guidance will be updated by the end of January 2021 with details on how to access the online claim service on GOV.UK.
The Job Retention Bonus is a £1,000 one-off taxable payment to you (the employer), for each eligible employee that you furloughed and kept continuously employed until 31 January 2021.
You’ll be able to claim the bonus between 15 February 2021 and 31 March 2021. You do not have to pay this money to your employee.
You can claim the bonus if you’re an employer who has furloughed employees and made an eligible claim for them through the Coronavirus Job Retention Scheme. Your employee must have been eligible for the Coronavirus Job Retention Scheme grant for you to be eligible for the bonus.
You can still claim the bonus if you make a claim for that employee through the Job Support Scheme.
Employees you can claim for
You can claim for employees that:
• you made an eligible claim for under the Coronavirus Job Retention Scheme
• you kept continuously employed from the end of the claim period of your last Coronavirus Job Retention Scheme claim for them, until 31 January 2021
• are not serving a contractual or statutory notice period for you on 31 January 2021 (this includes people serving notice of retirement)
• you paid enough an amount in each relevant tax month and enough to meet the Job Retention Bonus minimum income threshold
The minimum income threshold
To be eligible for the bonus you must make sure that your employees have been paid at least the minimum income threshold.
To meet the minimum income threshold you must pay your employee a total of at least £1,560 (gross) throughout the tax months:
• 6 November to 5 December 2020
• 6 December 2020 to 5 January 2021
• 6 January to 5 February 2021
You must pay your employee at least one payment of taxable earnings (of any amount) in each of the relevant tax months.
The minimum income threshold criteria apply regardless of:
• how often you pay your employees
• any circumstances that may have reduced your employee’s pay in the relevant tax periods, such as being on statutory leave or unpaid leave
For more information visit this link. https://www.gov.uk/guidance/check-if-you-can-claim-the-job-retention-bonus-from-15-february-2021
Job Support Scheme
This scheme comes into effect on 1st November 2020 for 6 months. can be utilised for employees who:
• were on your payroll on or before 23 September 2020 and;
• for whom you had previously made an RTI submission to the HMRC and;
• have not been served notice of redundancy
You can use this scheme for employees who have not previously been furloughed.
Key points to note:
• Employees must work and be paid a minimum of 33% of their usual hours -“usual hours” means pre-furloughed hours and pay
• The Government and employer will each pay 1/3 of normal hours not worked and the remaining 1/3 of unworked hours will be unpaid
• The Government’s monthly contribution is capped at £697.92 per employee
It is not clear at the moment how this will apply to those that work variable hours and there might be more rules to follow.
Here is an example of how this scheme works (taken from this page)
Beth normally works 5 days a week and earns £350 a week.
Her company is suffering reduced sales due to coronavirus.
Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours).
Her employer pays Beth £140 for the days she works.
And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, or £140, bringing her total earnings to £280, 80% of her normal wage.
The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of her normal wages) to Beth’s employer to support them in keeping Beth’s job.
No one has a crystal ball.
No one knows how long this situation will last, plan for the next 6 months and be prepared to adapt to changes which occur in your marketplace. The most important piece of advice is to get expert help and plan. Burying your head in the sand will not make the issues go away. The time to face next steps is now and remember the overall objective is to save your business.
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