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Furlough Bonus Announced to Reduce Redundancy

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On the 8th July 2020, Chancellor Rishi Sunak announced that they will be making a Job Retention Bonus available to support furloughed employees and businesses back into work. The bonus totals £1,000 and will be paid to employers for every individual employee that is brought back from furlough and remains in employment until January 2021 at the minimum.

New Treasury Direction on the Purpose of the CJRS

Prior to the official launch date of the new “flexible furlough” CJRS V2 on the 1st July 2020, further amends were made to the Treasury Direction for the Coronavirus Job Retention Scheme. This update included the rewording of the purpose statement of the CRJS V2, 2.1, which now states that:

Integral to the purpose of CJRS is that the amounts paid to an employer pursuant to a CJRS claim are used by the employer to continue the employment of employees in respect of whom the CJRS claim is made whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.”

The Impact of the Bonus on Redundancy

With 9 million members of the UK workforce currently furloughed under the CJRS, the Chancellor expects the new bonus scheme to cost around £9bn. Sunak announced that there would be no cap on the number of bonuses to be paid, and that the aim of the bonus scheme is to get “as many people as possible back from furlough” and to encourage businesses to retain their staff as the economy recovers and the CJRS support ends in October.

A recent survey carried out by ManpowerGroup reports that hiring intentions for the third quarter of 2020 are estimated to hit a 20-year low. In fact, the figures estimate the weakest employment forecast globally since records began in 1992. Whilst many employers are cautiously optimistic, more so in Japan, India, and Taiwan, that their workforce will return to pre-pandemic levels by April 2021, all countries and territories report a steep decline quarter-over-quarter in light of the coronavirus outbreak. Many report that they expect to make a significant amount of redundancies over the coming quarter.

The new bonus scheme is designed to reward and incentivise employers who successfully bring furloughed staff back. Sunak stated that the “message to business is clear. If you stand by your workers, we will stand by you.” This came as part of a series of measures pivoting around a three-point plan of finding, creating, and supporting jobs. This includes a proposed six-month VAT cut from 20% to 5% in support of the hospitality and tourism industries and a £2bn scheme to subsidise work placements for young people who are most at risk from unemployment as a result of COVID.

With the bonus benefits claimable in to 2021, and policies changing so rapidly, it’s vital for employers to maintain accurate records.

First Arrest Made for Furlough Fraud

The introduction of the Finance Bill 2020 is designed to crack down on these clear breaches of the rules as a survey found that one third of furloughed employees have been told to continue doing their normal work. Government legislation makes it clear that there is no room for error or misuse with regard to furlough claims. Any company found to have breached the terms of the CJRS will be required to pay back all furlough claims ade in full, and could face up to 10 years in prison for fraudulent claims.

The first arrest for committing furlough fraud was made on the 8th July. A 57-year old male from Solihull, was arrested in connection to a suspected £495,000 fraud of the CJRS. HMRC has confirmed that this is the first arrest of this nature to take place, and reinforces their firm stance on ensuring that the CJRS is used legitimately.

Accurate Records and Furlough Claim Eligibility

In order for businesses to be confident that their use of the furlough scheme is justified and meets government requirements, employers are required to formally track and report accurate working hours. Without this, employers will not be able to recover and claim employees wages. This kind of formal reporting is also necessary to ensure you have all the evidence to show that your use of the furlough scheme has been legal and above board. You also need to be able to safely store all data pertaining to your furlough claims for up to 6 years following the end of the scheme.

At Mitrefinch, we pride ourselves on creating workforce management solutions designed to meet the demands of modern-day working environments. Flexible working hours and the management of part-time, remote, workforces adds further administrative burden to an already stressed team.

Utilising powerful time and attendance software allows you to track time worked, shift patterns, absences, holidays, sick leave and more all from within one interface. It’s an incredibly powerful tool which will help you ensure that you are not risking your eligibility for financial support due to inaccurate, or poorly maintained, employee attendance records.

Whether you have a workforce of 50, or 500, the clever automation features and intuitive interface is designed with your business needs in mind. And the best part? It can be up and running in just two working weeks. If you’d like more information about our software, or simply want to discuss your needs with a member of our team please contact us via our contact form or use our live chat to speak to a member of our time management team immediately.

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