The Job Retention Scheme (JRS) has been extended to 30th September 2021, however, alongside the well-publicised gradual reduction in claim percentages (noted below), there are also new rules regarding variable paid workers which come into force from 1st May 2021.
March 2021 to 30 June 2021 employees receive 80% of their reference pay and employers can reclaim 80%;
July 2021 employees receive 80% of their reference pay and employers can reclaim 70%;
August and September 2021 employees receive 80% of their reference pay and employers can reclaim 60%;
Further details on the changing claim amounts can also be found on HMRC’s website
Templates
Click on the relevant month below to download templates that can be used for the varying months:
From 1st May the guidance has changed when working out variable pay. Full worked examples can be found here (variable pay change examples start from 3.14 onwards).
When calculating the average wages for employees who are not on a fixed salary, you should now no longer include periods of:
Statutory Sick Pay related leave
Family related statutory leave
Reduced rate paid leave following a period of Statutory Sick Pay or family related leave.
However, if an employee was on one of these types of leave for the entire period used to calculate their average wages, then you should continue to include the days and wages related to that leave.
If there is sick pay in the same period in 2019 then you will need to work out the average, as you will not be able to use that reference period and therefore will need the average working. Also, as you need to take the higher of the actual and the average, you will need to ensure you exclude any of these payments and days for hours when working out the average to determine the higher amount.
An HMRC example:
An employee started work for their employer in 2015 and was placed on furlough on 1st April 2021. The employee was not furloughed during the 2019 to 2020 tax year, and they received wages of £24,000 between 6th April 2019 and 5th April 2020 (inclusive).
The employee was on a period of statutory sick pay related leave between 1st September 2019 and 6th October 2019 (inclusive) – this is 36 days.
The employer is making a claim for the pay period 1st May 2021 to 31st May 2021.
There are 366 days between 6th April 2019 and 5th April 2020 (inclusive). For claim periods starting on or after 1st May 2021, the employer should not include the days where the employee was on statutory sick pay related leave, leaving 330 days. The employer should also not include wages related to a period of statutory sick pay related leave – this was £1,500, leaving £22,500. For claim periods which end on or before 30th April 2021 the employer cannot remove these days or these amounts of wages from the calculation.
The employer calculates 80% of the employee’s usual wages for the pay period 1st May 2021 to 31st May 2021 as follows:
Start with £22,500 (the amount of wages that was payable to the employee in the 2019 to 2020 tax year up to (and including) the day before they were first furloughed) – this does not include wages related to the period of statutory sick pay related leave
Divide it by 330 (the number of days from the start of the 2019 to 2020 tax year – including non-working days (up to and including the day before they were first furloughed, or 5th April 2020 – whichever is earlier)) – this does not include the days on statutory sick pay related leave
Multiply by 31 (the number of furlough days in the pay period (or partial pay period) the employer is claiming for)
Multiply by 80% – this is £1,690.91
It is crucial employers keep up to date with the guidance as the Chancellor continues to make tweaks!
The introduction page with various links can be found here.
For guidance and to dowload the JRS claim templates, follow the link below or get in touch with one of our Payroll team at help@armstrongwatson.co.uk or call 0808 144 5575.
