CJRS note: Further extension to the Coronavirus Job Retention Scheme
On 5 November 2020, the Chancellor announced that the Coronavirus Job Retention Scheme (Scheme), which had been planned to end on 31 October 2020, and replaced by the Job Support Scheme (JSS), would be further extended to 31 March 2021. In so doing, he shelved the JSS and the planned Job Retention Bonus.
It is important to note that this is an extension of the existing Scheme, and not a completely new scheme. As such, the Scheme will operate unchanged, save where otherwise stated in recently updated Government guidance. The updated guidance comprises 9 different documents – the links to all of which are at the end of this note.
Here we summarise the most notable elements of the Scheme, as it is now, and will be until 31 January 2021, the date of the next scheduled review. The Government will publish a separate Treasury Direction covering the period February – March 2021, and we will update you further once this is available.
How much can be claimed?
The level of financial support available under the Scheme mirrors that available in August i.e. the Government will pay up to 80% of wages for hours not worked, with a cap of £2,500. Employers are required to pay National Insurance contributions and pension contributions for those hours. The remaining 20% is unpaid, although employers can top this up if they wish.
Which employers can claim?
The Scheme is open to all employers irrespective of whether they have already submitted a claim or not, and whether the employer’s business is open or closed.
To be a ‘qualifying employer’, an employer must have a UK bank account and a UK qualifying PAYE scheme registered on HMRC’s RTI system on or before 30 October 2020. As with the original Scheme, public funded organisations should not furlough staff, although partially funded organisations may be eligible to access the Scheme where their private revenue has been disrupted.
Unlike the proposed JSS, which has now been shelved, there is no distinction made between the size of the employer or a financial threshold to be met; the Scheme is open to all employers irrespective of size.
Which employees can a claim be made for?
‘Employee’ is wide enough to include: office holders, directors and agency workers.
An employee does not need to have been furloughed under the original Scheme to be furloughed after 1 November. To be eligible, the employee must have been on the employer’s payroll on 30 October 2020, and a real time information (RTI) submission must have been made for that employee after 19 March 2020 and before 31 October 2020. Exceptionally, anyone made redundant on or after 23 September 2020, can be re-employed and put onto furlough.
When can I use the Scheme?
The latest Treasury Direction emphasises that it is central to the Scheme that claims relate only to those businesses whose “employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission”. Employers that access the Scheme from 1 November 2020 need to be confident that their claims are being made in accordance with the overarching purpose of the Scheme. To submit a claim where the business has not been adversely affected in any of the ways described would be an abuse and subject to HMRC challenge.
Is flexible furlough still permitted?
Yes, eligible employees can continue to be fully or flexibly furloughed, at the employer’s election. The same rules apply as before such that any employees who are fully furloughed cannot undertake work for or provide services to their employer (other than training). Therefore, if part-time work or hours are available, these should be offered under a flexible furlough arrangement, and if agreed, the employee should be paid their normal contractual rate for any hours that they work, and the furloughed rate for unworked hours.
What process must I follow prior to putting an employee on furlough or flexible furlough?
As before, employers should discuss any changes in terms (working hours, non-working hours and pay) with their staff in advance and make any changes by agreement. To be eligible for the grant, the employer must have confirmed to the employee in writing that they have been furloughed, which can be by email, and the terms that will apply during the furlough period. The employee does not need to sign any documents or provide a written response for the furlough agreement to be valid. It will be sufficient to update an earlier furlough agreement, provided it is done prior to the period of furlough commencing. The written record, together with details of worked and unworked hours, should be retained for 6 years.
Can furloughed staff work elsewhere still?
As before, employees who are furloughed from one employer can still undertake paid work for another employer where this is permitted under the employment contract.
Can I claim the grant for notice pay?
Employers can make employees redundant while they are on furlough. Until 30 November, such employers can continue to claim the grant while the employee is serving their statutory or contractual notice period.
However, importantly, from 1 December 2020 employers will not be able to claim in respect of any contractual or statutory notice periods which apply on or after 1 December. This is a significant change that employers will need to consider carefully in assessing whether to (continue to) access the Scheme in circumstances where redundancies seem inevitable.
As before, any redundancy payments that are made, including any notice element, must be calculated based on the employee’s normal pay rather than the reduced furlough rate.
Can employees on furlough be required to take holiday?
Employees can continue to take holiday while on furlough. Therefore, provided the requisite period of notice is given, an employer can designate a period of annual leave while an employee is on furlough. Furloughed employees should be paid at their normal rate of pay for any holidays that they choose or are required to take.
Can employees who are sick or shielding be furloughed?
The Scheme is not intended for short-term sickness absence. If, however, employers want to furlough employees for business reasons (as above) and they are currently on long-term sick, they can do so. Once on furlough, employees are re-classified as furloughed employees, and should no longer receive sick pay or be deemed to be taking sick leave for the purposes of statutory or company sick leave entitlements.
What if a furloughed employee becomes sick?
Furloughed employees who become ill must be paid at least statutory sick pay (SSP). If employers choose to pay (and later reclaim) SSP, then they can no longer claim the grant under the Scheme for that employee for that period of illness. The employer has a choice whether to move them onto SSP or keep them on furlough, at their furloughed rate of pay (which is likely to be greater). In our experience, most employers elect the furlough option to maintain the employee’s pay.
How and when can claims under the Scheme be made?
The Scheme will operate much the same as the original CJRS. So the minimum claim period will be 7 consecutive calendar days and the employer will need to report actual hours worked and the employee’s usual hours in the claim period. The claim period must start and end within the same calendar month, so where a claim period straddles two calendar months, two separate claims will need to be made. Claims relating to:
- November 2020 must be submitted by 14 December 2020;
- December 2020 must be submitted by 14 January 2021; and
- January 2021 must be submitted by 15 February 2021.
The deadlines for claims relating to February and March 2021 have yet to be set. Payments of grants are anticipated to be made within 6 working days of the claim.
How can I work out how much I can claim?
The online calculator should be your first port of call (). It is an effective means of calculating the amount of a claim for most employees. If the claim relates to an employee who is flexibly furloughed, the employer will need to work out their usual hours before using the calculator. You should also refer to the guidance contained in the fourth guidance note below “Calculate how much you can claim using the CJRS”.
- Check if you can claim for your employees’ wages through the CJRS
- Check which employees you can put on furlough to use the CJRS
- Check if your employer can use the CJRS
- Calculate how much you can claim using the CJRS
- Examples to help you calculate your employees’ wages
- Steps to take before calculating your claim using the CJRS
- Claim for wages through the CJRS
- Reporting employees’ wages to HMRC when you’ve claimed through the CJRS
- Other types of employees you can claim for
For further details of the Scheme and how it operates in practice, please get in touch with a member of the team: firstname.lastname@example.org / 01904 437680.