• The Coronavirus Job Retention Scheme (CJRS), set up from March, allows employers to reclaim 80% of furloughed workers’ wages, capped at £2,500 a month. In addition, employers could reclaim their 3% auto-enrolment pension contributions and employer NI contributions (NICs).
• From July, employers could bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim the CJRS grant as well as employer National Insurance Contributions and pension contributions for the hours not worked. Employers had to pay employees for the hours they worked.
• From 1 August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough but employers will now have to start paying their employer auto-enrolment contributions and NICs for furloughed employees.
Kate Smith, head of pensions at Aegon comments: “From August, employers can no longer reclaim their auto-enrolment 3% pension contributions under the job retention scheme for furloughed workers. Pension contributions must be calculated based on the actual amount of pay received, whether this is furlough pay of 80% of pay, capped at £2,500 a month, topped up pay, or time worked.
“Some employers, which previously paid higher pension contributions may have reduced these down to the auto-enrolment minimum for furloughed workers on a temporary basis. Normally employers with more than 50 employees have to carry out a 60 day consultation with their employees and representatives on changes to contributions. To give employers breathing space during the Covid-19 crisis, the Pension Regulator relaxed these rules, but only in respect of furloughed workers and only until 30th September. As ex-furloughed workers return to work, employers are reminded that they must reinstate their higher pension contributions for these workers. If employers intend to reduce their pension contributions down to the auto-enrolment minimum for longer, they must carry out a 60 day consultation. Under no circumstances should employers stop paying pension contributions, this is illegal and will attract fines.”
References:
*https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme
Source: HMRC July 2020
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