Further guidance on the extended Job Retention Scheme (JRS) was recently released covering your client’s query.
Your client should keep in mind that for employees to be eligible to have their wages claimed for under the extended JRS, they must be on an employer’s PAYE payroll by 23:59 30 October 2020. This means that your client must have made a Real Time Information submission notifying payment for their employees to HMRC between 20 March 2020 and 30 October 2020.
Your client will need to calculate their employees’ reference salary in order to determine what 80% of it is. When employees are on flexible furlough, it will also be necessary to calculate what their usual hours are so you can record both working and furloughed hours.
For employees on fixed pay, employed on or after 20 March 2020, the last pay period prior to 30 October 2020 provides the basis for calculation. For employees on variable pay or hours, employed after 20 March, the average of tax year 2020 to 2021 up to the start of the furlough provides the basis for calculation.
For employees that meet the eligibility criteria, and were previously furloughed, your client must use the same calculations for calculating reference pay and usual hours as the original JRS.
For an employee who meets the criteria of the extended scheme, but was not previously eligible for JRS, alternative calculations of reference pay and usual hours must be used. Here, 80% of wages (subject to the £2,500 cap) must be calculated for employees, as follows:
- on a fixed salary – 80% of the wages payable in the last pay period ending on or before 30 October 2020
- whose pay varies – 80% of the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their JRS extension furlough periods begins
Your client should be aware that these dates are inclusive.
If an employee was not previously eligible for JRS and works fixed hours or their pay does not vary according to the number of hours they work, their usual hours will be the contracted hours worked in the last pay period ending on or before 30 October 2020.
If an employee was not previously eligible for JRS and works variable hours, their usual hours will be the average hours worked between:
- the start date of the 2020 to 2021 tax year, (for example, 6 April 2020)
- the day before their JRS extension furlough periods begins
Again, these dates are inclusive.
It is essential that your client familiarise themselves with this as much as possible and regularly check it for updates, including updates on the scheme as a whole.
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