December 2021

Impact of Coronavirus Support Schemes in U.K.

By Mathew Akrigg, ACIPP

The coronavirus pandemic that began more than 20 months ago was the catalyst for the U.K. government to introduce support schemes that kept workers paid and employed while assisting employers with meeting these costs. This has had a huge impact across the payroll profession, with many changes being required and very little time to implement robust systems to handle this increased workload. Many will be relieved that these schemes are ending, while others may be facing uncertain times. Let’s look at each of these schemes.

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (CJRS), which was originally implemented in March 2020 to ensure employees continued receiving an income when they had to stop working—or working fewer hours—as a result of the coronavirus, ended 30 September. The final CJRS claims for September had a submission deadline of 14 October 2021.

The last extension up to the 30 September deadline for the CJRS introduced a tapering off of government support to employers, with the employer paying more to furlough its staff. The final two months saw government contributions set to 60% of the wages for hours not worked—up to a maximum of £1875. This meant that employers contributed the remaining 20% (up to a maximum of £625) to ensure that the employee received the 80% guaranteed (up to £2500). Employers also had the choice to pay above the 80% total and £2,500 cap at their own expense.

The closure of the CJRS in September brought a potentially difficult and sensitive choice for employers with furloughed employees. Employers needed to consider the following options:

  • Continue with the employee’s agreed terms and conditions of their contract of employment
  • Make alternative arrangements with the employee, facilitating changes to their contract by mutual agreement, such as reduced contractual hours
  • End the employment by way of redundancy. All normal rules and considerations need to be adhered to with a redundancy in this situation, such as the need for the redundancy to be fair.

The removal of this scheme will likely result in further redundancies, having a large impact on the wider job market over the coming months. In a recent survey by the British Chamber of Commerce (BCC), 18% of employers indicated the reduction funding to 60% of their workers’ salaries would likely result in staff being made redundant.

While numbers of workers on furlough are declining, the number of workers who were on furlough in July was still 1.6 million.

Employees cannot be on furlough and working a notice period. They must be paid their full rate of pay for this period. Employees where redundancy is the unfortunate outcome may also be eligible for redundancy pay, which must be calculated using their full rate instead of the reduced 80% of pay under the CJRS. The government’s “Plan for Jobs” is now the focus of support measures to help individuals into work through employer incentives.

With CJRS ending, the Taxpayer Protection Taskforce is expected to ramp up its investigations. So far, more than 10,000 employers have already been contacted. The HMRC taskforce, which was announced in the March 2021 Budget with a £100 million backing, will be working to identify erroneous or fraudulent claims against the various support schemes available.

Coronavirus Statutory Sick Pay Rebate Scheme

The Coronavirus Statutory Sick Pay (SSP) Rebate Scheme closed on 30 September 2021. Workers have until 31 December 2021 to submit their claims. To use this scheme, the employer must be running a Pay As You Earn (PAYE) payroll scheme created on or before 28 February 2020 and have fewer than 250 employees as of that date.

The scheme was implemented to assist small and medium sized businesses across the U.K. Eligible companies could claim for up to two weeks per worker (multiple claims per worker can be made if they do not add up to more than two weeks) at the rate of SSP. These claims must link to absence in relation to coronavirus sickness or self-isolation—the definition of entitlement varied over the lifetime of the scheme—and can only be made against employees who have already been paid SSP.

In the U.K., SSP is calculated and paid for each qualifying day of absence (subject to eligibility).  Qualifying days are based on the employee’s normal working pattern. A new period of absence would usually include three waiting days—qualifying days where SSP is not payable. However, since March 2020, if the sickness or self-isolation is COVID-19-related, workers are paid SSP from their first qualifying day, provided that the absence is four days in a row or longer. SSP is not payable where a worker is self-isolating after entering or returning to the U.K. The government has not yet confirmed for how long this exception will continue to apply.

With pressure mounting to lay out plans to fund the various coronavirus support schemes, we look to the next big change to the U.K. payroll industry, the Health and Social Care Levy.

Mathew Akrigg, ACIPP, is a Policy and Research Officer for the Chartered Institute of Payroll Professionals (CIPP).
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