The Coronavirus Job Retention Scheme (CJRS), or furlough scheme, was a short term solution to the COVID-19 lockdown. It was never a long term fix. Its main aim was to help businesses and their employees by paying 80% of staff wages from government funds. This meant that 10 million people could afford to stay safely at home and still have enough money to stay afloat. And it meant that the cost of lockdown wasn’t entirely borne by businesses.
As set out by Chancellor Sunak, the furlough timetable is about to change.
How is the CJRS changing?
Let’s lay out the basics of the furlough scheme from July to November 2020:
- July: scheme flexibility comes into play, with furloughed workers allowed to return part time and government payments are adjusted accordingly.
- August: Government still paying 80% full furloughed staff wages, up to £2,500. Employers begin to pay employee National Insurance Contributions (NICs) and pension scheme amounts for their furloughed staff.
- September: Government pay 70% furloughed staff wages, up to £2,187.40, with employers expected to pay 10%
- October: Government pay 60% furloughed staff wages, up to £1,875, with employers to pay 20%.
- November: Scheme ends completely, government money no longer available in this way.
To make sure that employees still receive a minimum of 80% of their pre-COVID salary, the government are expecting employers to step up in amounts that are concurrent with the reduction of government support through the Coronavirus Job Retention Scheme (CJRS).
What happens after the CJRS ends?
Once government support is reduced to zero, employers will be faced with three choices. They can welcome their employee back at their pre-COVID work levels. Or they can reduce their hours. Or, the one people are most worried about, they can make redundancies.
These last two options will weigh heavy on employers’ shoulders. But each business will be facing different challenges as a result of lockdown, subsequent loss of earnings and continuing COVID-19 restrictions.
As you make your decisions, don’t forget to factor in other government support.
Furlough fraud fallout
HMRC are left with thousands of cases of furlough fraud in the aftermath of the scheme. Some employees have reported their employers for claiming through the CJRS and making them work when they should have been keeping safe and well at home. HMRC have flagged other cases where companies have claimed for more staff than they really have, or saying they work more hours than they’re contracted for.
The last reported figure was 7,791 cases reported to HMRC of people defrauding a scheme that was designed to keep taxpayers safe and with the ability to pay the bills.
HMRC said: “We are committed to protecting the support schemes against abuse from organised criminal attacks, inflated claims and other non-compliance. We designed the schemes in a way that reduced the likelihood of mistakes happening in the first place and removed opportunities for fraud. Where honest mistakes happen, we’re stepping in to help customers to simply put it right while taking tough action on fraud.”
“We are now starting to investigate claims in depth, paying particular attention to Job Retention Scheme claims that are out of step with the payroll data that we hold and drawing on the 8,000 calls that have come into our fraud hotline from members of the public. We have legal powers to recover any money that has been overclaimed and we have already made an arrest in relation to suspected criminal activity.”
And rightly so. This is your taxpayers’ money being wasted here. It is shameful that some people consider a global health pandemic and national economic crisis to be a criminal opportunity.
HMRC have the skills and experience to catch these fraudsters and put the money back in the public purse. It may not be a quick process, but it’s unlikely that many businesses will get away with it.
So, as we move into the next phase of the CJRS, there are changes for everyone; employers, furloughed employees and HMRC. Let’s work through them together.