Coronavirus job retention scheme: contractor update

The government recently issued updated guidance surrounding the Coronavirus Job Retention Scheme (CJRS), outlining how it will change over the coming months. Here’s a brief summary of the developments most likely to affect you, our contractors:

• The CJRS will continue in its current format until the end of July, but will close to all new entrants at the end of June (30th).

• From August, employers will be required to pay pension contributions and Employer’s National Insurance Contributions (Er NICs).

• As well as pension contributions and Er NICs, from September, employers will also be required to contribute 10% of their furloughed workers’ pay.

• This will double to 20% at the beginning of October, on top of the usual pension and Er NI contributions. At this stage, the government will pay 60% of wages (down from 70% in September and 80% in August) up to a cap of £1,875 for the hours the employee has not worked.

• The CJRS will then close in November 2020.

Due to the considerable, additional costs of the scheme post-July, Danbro will not be operating the CJRS beyond July 31st 2020.

Our participation in the CJRS has always been on a voluntary basis. We are not obliged to make any furlough payments as the costs are significant and contractors have no legal entitlement to them.

We are making furlough payments simply because we believe it is the right thing to do for you.

Furthermore, Danbro will not be accepting any new entrants onto the CJRS from Monday (June 8th 2020), onwards. As the CJRS has a minimum eligibility period of three weeks, your furlough period must start on or before June 8th. That’s three full weeks before the scheme closes to new applicants.

How are furlough payments calculated?

All furlough payments are calculated strictly in accordance with the latest CJRS guidance. In summary, for those employed from the start of the 2019/20 tax year, we can claim the highest of either:

– 80% of the same month’s pay from the previous year (up to a maximum of £2,500 a month)

OR

– 80% of their average monthly pay for the 2019/20 tax year (up to a maximum of £2,500 a month).

‘Average monthly pay’ is calculated by dividing your total earnings in the tax year by the number of days you were employed in the tax year. Where we do not have a comparison from the previous tax year, the average is taken.

Are you returning to work?

For our contractors, we must once again stress how crucial it is that we are made aware of your furlough status as soon as possible, so we can pay you correctly. You must inform Danbro as and when you are due to go back to work.

If you return to work and receive payment for a period in which you’ve already received a furlough payment under the CJRS, you will be in breach of our furlough agreement. In this instance, we will recover the furlough payment immediately.

We thank you for your consideration in these unfamiliar times and hope that the gradual easing of the government’s guidelines offers comfort and a vision of happier times for us all.