Money Matters

Coronavirus Job Retention Scheme ending: What your business can do to prepare

The Coronavirus Job Retention Scheme (CJRS) is coming to an end. Here's how to adapt your business and prepare.

Believe it or not, the Coronavirus Job Retention Scheme (CJRS) began back in March 2020.

It was a true lifeline for businesses struggling with coronavirus disruption.

The scheme evolved and was extended several times in response to ongoing conditions.

But it comes to a final end on 30 September 2021 and businesses must make their last claim by 14 October 2021.

Depending on how long your business has been using the CJRS, and the extent, adapting to its termination may require almost as much work as its introduction 18 months ago. As well as practical payroll and cash flow concerns, staff expectations and communications have to be managed.

In this article, we look at some of the challenges for the ending of the CJRS, and what can be done.

Here’s what we cover:

Ensure you get the final Job Retention Scheme claim in on time

Review employee contracts to remove furloughed working

Repay Job Retention Scheme grant overclaims

Ensure records of Job Retention Scheme payroll and claims are kept

Communicate with employees

Plan for holidays

Ensure your cash flow is ready

Prepare for redundancies

Final thoughts on the Job Retention Scheme

The deadline for claiming for September’s payroll is 14 October 2021. Any amendments must be made by 28 October 2021.

Remember that you can claim before, during or after your payroll – but you can’t claim more than 14 days before the claim period end date.

In other words, the window for making your final claim is 17 September to 14 October 2021.

For September 2021’s payroll, you can claim up to 60% up to a cap of £1,875 for furloughed hours and must contribute the remaining 20% yourself (up to a maximum of £625). You must make employer National Insurance contributions and minimum mandatory pension contributions.

Your processes for furloughing should have meant you reviewed employment contracts each time it was used for a given employee. In doing so, you will hopefully have defined a period of time for the furloughing (e.g. “You are required to work 10 hours and 10 furloughed hours until 30 September 2021”).

Nonetheless, it’s now necessary to switch employees back to pre-CJRS work patterns and this needs to be reflected in updated or refreshed employment contracts.

Of course, if your business has adopted flexible working practices, such as more home-working opportunities, then any original employment contacts may need to be amended to reflect this. If the employees are members of a union then wider consultation may be required.

Spend time reviewing all the CJRS claims made by your business to ensure an error wasn’t made anywhere along the line.

Any overclaims made must be notified to HMRC within 90 days of either receiving the grant, or of when the circumstances changed that meant you were no longer entitled to the grant. The overclaimed money must be paid back.

HMRC says penalties of up to 100% of the grant amount might be applied if you fail to inform it within that period.

A process should be initiated in which managers are asked to confirm that employees did not attend work in the days when they were furloughed.

For example, an emergency might have prompted an employee to return temporarily. They might even have done this without the knowledge of the manager.

They may have been notified by other employees. Or managers may have changed working plans at the last minute and failed to update you about the matter.

Most businesses ran a separate pay line for the CJRS furlough payments. Upon switching back to the regular salary pay line, there may be a desire to simply delete the one used for the CJRS.

But that would be a mistake.

HMRC requires payroll records are kept for at least three years from the end of the tax year they relate to.

Furthermore, you must keep a written record of any agreements with furloughed employees for a minimum of five years.

And you must keep the following records relating to each individual CJRS claim for six years:

  • The claim reference number you’re given.
  • Any calculations you used to work out how much the claim should be, such as spreadsheet files or even calculations that you’ve written down.
  • The amount claimed for each employee.
  • The hours worked and the hours usually worked for flexibly furloughed employees.
  • A copy of all records, including the amount claimed under the scheme, and the claim period for each employee.

Records are kept in this way in case of any challenges or reviews by HMRC.

Working with line managers, you’ll need to ensure employees know of their return date and the working hours expectations of them at that time. As above, if the employees are represented by a union then you may need to consult them too.

Your business may have introduced long-lasting changes inspired by the coronavirus disruption. You may now allow or even expect flexible working (covering the likes of remote or hybrid working), for example. Or you may have introduced a timesheet system to manage working hours that previously hadn’t been required.

All of this will need to be communicated to employees, with training if necessary. A two-way dialogue methodology should be established so any choices made by employees can be relayed to the payroll and people management teams.

If redundancies are required, then you have to consult with employees or risk an employment tribunal. See Prepare for redundancies below.

Employees retained the legal right to accrue holiday even if they were full or part-time furloughed.

Employees that have been furloughed may not have taken much, if any, annual leave this year because they were already outside the work environment. And as we approach the end of the year, workplaces may find themselves short-staffed as employees attempt to use up their entitlement.

Remember that it’s a legal requirement that employees are given statutory annual leave each year (currently 28 days paid annual leave a year for a full-time employee).

While employers can restrict when leave is taken (limiting it during busy periods, for example), it’s not lawful to block employees from taking annual leave. In fact, workplace legislation says employees should be encouraged to take their leave.

Therefore, scheduling across teams may be required, with employees encouraged to take their holidays in shorter bursts, rather than booking weeks or even whole months.

You might wish to consider introducing schemes such as holiday buyback, whereby the employee agrees to accept payment in return for sacrificing holidays.

However, this cannot override the statutory right for 28 days of paid holiday.

In other words, an employee whose contract effectively provides them with 33 days holiday per year (25 days plus eight bank holidays) could ‘sell’ a maximum of five days to their employer. The rest must be taken as annual leave.

(Note that Scotland has nine bank holidays in 2021, while Northern Ireland has 10.)

Of course, if the employee has purchased additional holidays then they could also sell these back to the employer.

Any holiday buyback scheme will once again require an adjustment to the employee’s working contract.

Needless to say, you need to ensure your business can support the payroll when employees return to work after being furloughed.

This will involve forecasting your profit and loss for the coming months, which can be difficult in such uncertain times. Consulting your accountant, if you have one, will help.

Remember that switching employees from full to part-time working will involve new employment contracts, and this will need to be done ahead of time or the employee could challenge you in court.

If your business finds itself unable to afford taking back all existing employees, you might have to prepare for redundancy procedures.

Redundancy procedures are defined by rules and regulations that you must follow.

For example, the actions you take mustn’t discriminate against individuals or groups. Choosing older employees for redundancy, or those at a higher pay level, are just two ways your actions would be considered automatically unfair and discriminatory.

It might be worth investigating voluntary redundancy or early retirement options first, although again you must be fair throughout. These must be offered to the entire workforce, and you can’t single out just one person for such an offer.

If compulsory redundancies are required, you should consult with employees first. If you need to make 20 or more employees redundant at the same time then collective redundancy rules apply. You’ll need to carry out a consultation of a minimum length with a representative for the workers.

If you’re making employees redundant you will need to provide statutory notice periods. These are:

  • At least one week if the employee has worked for you for less than two years.
  • One week’s notice for each year an employee has been with you if they’ve been employed between two and 12 years.
  • 12 weeks’ notice if the employee has been with you for 12 years or more.

Alternatively, you may be able to make a payment in lieu of notice if the employment contract allows it.

The CJRS helped minimise stress for businesses. But with the scheme coming to an end, businesses now need to look forward while ensuring that the final requirements of CJRS are tied up neatly.

Make sure all stakeholders in your business are aware of their roles and ensure bilateral communication for every employee is a feature in any plans you create.

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