As a result of the lockdown restrictions due to begin on 5 November 2020, the Chancellor has announced that the Coronavirus Job Retention Scheme (furlough), which was due to end on 31 October 2020, will be extended. The Job Support Scheme, which was due to start on 1 November 2020, has been suspended and is now due to begin when the CJRS ends.
Key details for employers on the extension of the CJRS:
When does it come into force?
- It will cover the period from 1 November until 30 April 2021, so that there is no gap between the original and extended scheme (even though the lockdown restrictions did not start until 5 November 2020).
- It has now been confirmed that employer contributions will not increase from February as had previously been anticipated.
Which employers and employees can use the scheme?
- It will be open to employers regardless of whether they previously used the furlough scheme and employees do not need to have been furloughed previously.
- As before, it applies to staff paid through PAYE, on any form of contract, including casual staff.
- Employees must have been on the employer's payroll before midnight on 30 October 2020 and RTI payroll information submitted to HMRC before that date. However, employees who were on the payroll on 23 September 2020, left after that date and are now rehired, can be furloughed under the extended scheme.
How does the scheme work?
- Furloughed employees can work reduced hours, as under the flexible furlough scheme which applied from July to October 2020.
- The extended scheme will cover 80% of wage costs for unworked hours, up to a cap of £2,500/month (reduced pro-rata to reflect the proportion of unworked hours). Employers must pay all employer NI contributions and auto-enrolment pension contributions. The financial terms are therefore the same terms which applied in August 2020.
- Employees must be paid as usual for any hours they do work.
- Calculation of unworked hours and furlough pay/claims for most staff will be similar to that under the original flexible furlough scheme. For staff who were not eligible under the previous furlough scheme but are now eligible under the extended scheme, pay and hours are calculated using contractual pay/hours as at 30 October 2020, or, for those with variable pay/hours, using average pay/hours between 6 April 2020 and the start of their furlough period.
- Employers remain entitled to top up pay for unworked hours if they wish.
- Employees must agree to being furloughed - for those who were furloughed previously, an extension will be need to be agreed. Any retrospective agreements must be put in place by 13 November 2020.
Redundancy payments are not covered by the grant, and nor is notice pay from 1 December 2020.
- Claim periods will need to be for at least 7 days. Claims can be submitted from 11 November 2020 onwards and can be made in arrears for the period 1- 11 November, or in advance for any future periods.
- As before, claims must start and end in one calendar month. The claim must include all furloughed employees for which a grant is being claimed for that period, as overlapping claims are not permitted.
- Claims under the pre-November scheme must be submitted by 30 November 2020 and cannot be amended after that date.
- Claims for periods from 1 November onwards must be made by the 14th day of the following month.
- HMRC will publish the names of participating employers (with an indication of the value of the claim) which submit claims for periods from 1 December onwards.
The Job Retention Bonus scheme has been scrapped. It may be replaced with a different incentive scheme in due course.