Beware of small print says RSM
The government’s announcement to extend the Coronavirus Job Retention Scheme in its current form until 31 July will largely have been welcomed by businesses says RSM.
Nonetheless the leading audit, tax and consulting firm has warned businesses to take heed of the detail behind the announcement to avoid getting tripped up later down the line.
Carolyn Brown, employment legal partner at RSM, comments: ‘Businesses should take note of what Mr Sunak actually said yesterday. He referred to this extension applying to those currently furloughed. Some employers have chosen for good operational reasons to rotate their employees who are furloughed. It may be that this ongoing support for those returning to work after July on a part time basis will not apply to those who have not been furloughed throughout the entire scheme period. Or at least not to those who were not furloughed on 12 May when the chancellor made his announcement.
‘This would appear to limit the continuation of the furlough scheme to those businesses, such as in the hospitality sector, who have not been able to operate at all. If we remember back to 20 March when the scheme was first announced, this was exactly the basis upon which the scheme was initially introduced. From 4 April the wording was changed to apply to those businesses “severely affected”. Perhaps the weaning off will not only be tapered as to contribution amounts but it may also only be maintained for those businesses where it is most needed.’
From1 August to 31 October the scheme will continue but with changes to allow for more flexibility to get employees back to work.
The government press release stated that from the start of August furloughed workers will be able to return to work part time, with employers being asked to pay a percentage towards the salaries of their furloughed staff.
The release says the extension will see workers ‘continuing to receive 80% of their current salary’. As many employers have not topped up the 80%government contribution to 100%, it may be that employees are at risk of only receiving 80% of their currently reduced salary.
Details on how the furlough scheme will work from August to October will be announced by the end of May.
Susan Ball employer solutions partner at RSM, comments: ‘government issued instructions yesterday that employers should not self-correct claims but wait for the formal mechanisms to be provided for this. We are expecting to see a number of early claimants needing to make corrections where commercial business imperatives required speedy calculations to be made for March and April.
‘We must also expect added complexity in the calculation of claims from the summer where there will be a top-up by the employer to be considered for those who are not currently topping up. The part time pay elements will increase this. We have already seen many calculations challenges from not spotting that there were 366 days in 2019 not 365 to the NIC attribution requirement in split periods or where there are top-ups.’
