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Extension of the Coronavirus Job Retention Scheme (CJRS) – full details

Last week the Chancellor, Rishi Sunak, announced a further extension to the CJRS until 31 March 2021.

The Government issued a policy paper and yesterday they released updates to their seven guidance notes to cover the period to 31 March 2021, but with the intention that the guidance will cover the period from 1 November 2020 to 31 January 2021 inclusive. Guidance for CJRS claims from 1 February 2021 onwards will be published following a review of the scheme in January 2021 by the Government, after taking in to account the business economics at the time.

For those employers who are now experienced with the furlough scheme and the calculations, then actually very little has changed, and they will be familiar with the process.

Overview

As before employers should have furlough agreements in place with their employees for any temporary changes to their terms and conditions. The employer must agree the changes with the employees and confirm that agreement in writing to the employees. Earlier agreements may need to be updated (particularly if they were time limited) or put in place for the first time for new entrants to the scheme. For the period from 1 November, agreements can be put in place retrospectively up to 13 November 2020.

HMRC has also mentioned that they intend to publish details of employers who use the scheme for claim periods from December. Employees will be able to find out if their employer has claimed for them under the scheme, unless the employer can show there is a risk of violence or intimidation if these details are published. Further details on how to request that HMRC do not publish employer’s details will be available soon.

Employers will be able to apply for CJRS online from today, Wednesday 11 November 2020, for periods from 1 November.

IMPORTANT – there are now monthly deadlines for claims.  Claims for periods on/after 1 November must be submitted within 14 calendar days after the month they relate to, unless this falls on a weekend in which case the deadline is the next weekday e.g. employers will need to submit any claims for November 2020 by 14 December 2020.

Employers must remember to submit any claims for periods up to 31 October on or before 30‌ ‌November. Claims for periods up to 31 October will not be accepted after 30 November.

CJRS rules

The scheme is effectively a return to the scheme that was in place at August 2020, but there are a few differences. I have summarised below the main changes that come into effect from 1 November and will be in place until 31 January 2021 prior to the HMRC review of the scheme.

Employers

  • Must be a UK business, whether open or closed under any local or national lockdowns
  • Must have a UK bank account and PAYE scheme
  • No need to have previously used the CJRS
  • There is no maximum cap on the number of employees who can be claimed for from 1 November, based on previous claims
  • Should be a privately funded business (although partially publicly funded organisations may be eligible where their private revenues have been disrupted)

 Employees

  • The employee does not need to have been previously furloughed
  • Must be on employer’s payroll on 30 October 2020
  • Their employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, which notifies a payment of earnings for that employee
  • Can be employed on any type of contract

As with the existing CJRS, eligible employers can either fully, or flexibly, furlough eligible employees.

There is no minimum furlough period.

In terms of flexible furlough, employees can work any pattern and there are no minimum hours requirement. Flexible furlough agreements can last for any period of time, and employees can be rotated on and off flexible furlough.

Each claim period needs to be a minimum of 7 consecutive days.

The guidance does mention that furloughing is not a replacement for holiday and this will need to be borne in mind as we approach the festive season.

The Government will contribute 80% of usual wages for hours not worked, up to a maximum of £2500 per month. Employers will be responsible for National Insurance (NI) and employer pension contributions. Employers will need to deduct, and pay to HMRC, income tax and employees’ NI on the CJRS grant they receive.

Employers can choose to top up the Government’s contribution to the employees’ full salaries.

For the hours which employees do work, the employer will be responsible for the employee’s normal wages, as well as NI and pension contributions, in the normal way.

Those employees who were on an RTI submission on or before 19 March 2020 will be subject to the calculation method applied in August 2020 for reference pay and usual hours, even if they have not been previously furloughed prior to 31 October 2020.

New employees to the scheme:

Reference pay period

For new employees, those employed between 20 March 2020 and 30 October 2020, who were not eligible for the previous CJRS, then there is a different period to be considered for the calculation and HMRC’s latest guidance provides examples for the following:

  • Fixed salary employees – the employee’s reference period will be their last pay period ending on or before 30 October 2020. These employee’s will only be eligible for periods starting on or after 1 November 2020
  • Variable salary employees – with reference to the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their furlough period begins (dates are inclusive)

Usual Hours

For an employee:

  • Who is contracted for a fixed number of hours, and whose pay does not vary according to the number of hours they work, ‘usual hours’ will be the contracted hours worked in the last pay period ending on or before 30 October 2020
  • Who works variable hours, ‘usual hours’ will be the average hours worked between (dates are inclusive) 6 April 2020 (or, if later, the date the employment started) and up to the employee’s first day spent on furlough on or after 1 November 2020.

The employer must keep records of the number of hours which are worked and not worked by each furloughed employee, for 6 years, together with details of the calculations and amounts claimed.

Employers must keep the written record of the furlough agreement for 5 years.

The Government has said that employers can, up to and including 13 November 2020, enter into furlough agreements with employees which are backdated to 1 November 2020. The retrospective agreements appear to have been allowed because the introduction of the scheme of the CJRS has been at short notice, when businesses had been preparing for another scheme.

Eligible employees can be furloughed for reasons unrelated to their employer’s financial situation or closure, where the employees are shielding or have caring responsibilities or are off sick.:

The Government’s guidance emphasises that the extended CJRS is not intended to be used for short-term sickness absences, although this will not affect the furloughing of an employee for business reasons, who just happens to be off sick at the time.

In terms of those employees who are placed on furlough, and then subsequently become ill (whether Covid-19 related or not), it is up to the employer whether to move the employees onto Statutory Sick Pay or keep them on furlough.

Furloughing for long-term sickness absence appears to be acceptable.

It is possible to re-employ employees (or extend a fixed term contract) who have been made redundant or stopped working for their employer and then furlough them, where:

  • Employees were on an employer’s payroll on 23 September 2020, and
  • They must have been on an PAYE RTI submission to HMRC made from 20 March 2020 to 23 September 2020, notifying a payment of earnings for the employee concerned

This applies to employees who were employed on fixed term, as well as permanent contracts.

The guidance mentions TUPE arrangements and that a claim can be made for periods after 1 November providing they:

  • Transferred from their old employer to their new employer on or after 1 September 2020
  • Have been employed either by their old employer or new employer on 30 October 2020
  • Were on a PAYE Real Time Information (RTI) submission to HMRC, by their old or new employer between 20 march 2020 and 30 October 2020, notifying a payment of earning for that employee

 

As a change to HMRC’s previous guidance, from 1 December 2020, an employer cannot claim for any days during which the furloughed employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation). If an employee subsequently starts a contractual or statutory notice period on a day covered by a previously submitted claim, you will need to make an adjustment.

The rules here are the same as with the previous versions of the CJRS:

  • Whilst on furlough, employees are not permitted to carry out any work for their employer, or any linked / associated employer.
  • They can take part in training, volunteer for another employer or organisation, or (if they are contractually permitted to do so) work for another employer.
  • Employees will retain their usual entitlements such as annual leave.

Employers will be able to claim from today, Wednesday 11 November 2020.

Generally, claims can be made in advance, however, for the period 1 November 2020 to 11 November 2020, monies will need to be claimed in arrears.

As previously or as mentioned above, employers will need to:

  • Report and claim for a minimum period of 7 consecutive calendar days
  • Report actual hours worked and the usual hours an employee would be expected to work in a claim period
  • The claim period must start and end within the same calendar month. If the pay period includes days in more than one month, each of those claims will need to be calculated separately. Claim periods cannot overlap
  • Claims relating to November 2020 must be made by 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month
  • HMRC may accept a claim made after the relevant deadline if you had a reasonable excuse for failing to make a claim in time and you then claimed without delay after that excuse no longer applied. HMRC will not consider reasonable excuses in advance of a claim deadline
  • If you want to delete a claim in the online service, you must do this within 72 hours of starting it
  • Grants payments are anticipated to be received by employers from HMRC 6 working days after the claim is made
  • If you have not claimed enough, for claims relating to periods after 1 November 2020, you will only be able to increase the amount of your claim if you amend the claim within 28 calendar days after the month the claim relates to (unless this falls on a weekend and then it is the next working day)

The Job Support Scheme has been postponed for the time being.  It is possible that it might be introduced after the extended CJRS ends on 31 March 2021.

The Job Retention Bonus will not be paid in February 2021 as previously envisaged. It may be that an alternative retention incentive will be introduced as and when appropriate.

PKF Francis Clark

As always we are here to help – so if you have any questions on the above, please contact me or Scott Campbell.

FEATURING: Steve Ashworth
Before joining the Bristol office of PKF Francis Clark in July 2019, Steve started his career at HMRC over 30 years ago and then spent… read more
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