Set to end on 31st October, the CJRS aka Furlough has not only been extended to cover England’s second lockdown but until the end of March 2021 across the UK. This announcement came as a surprise to many and has received a mixed reaction from both business owners and workers.
The following information is what we know so far and applies to claims for the period between 1 November 2020 and 31st January 2021. Further details are set to be released on 10th November and the scheme will once again be reviewed in January 2021.
In response to the latest guidance, here are the 8 takeaways we think you need to know about.
The scheme will run much the same as it did back in August
Similar to the rules of August, for claim periods running to January 2021, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The government will pay this to the employer who must pass this on to the employee. The £2,500 cap is proportional to the hours not worked. Neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS. Employers across the UK can claim, whether their businesses are open or closed.
Employees can be furloughed on a full time or part-time basis
Employers have the flexibility to use the scheme for any amount of time or shift pattern regardless of the type of contract an employee is on. Employees can be furloughed on a full-time or part-time basis and the hours worked can vary given both parties agree.
Employees need to have been on PAYE Payroll by 23:59 on 30th October
To be eligible, employees need to have been on PAYE Payroll by 23:59 on 30th October. A PAYE Real Time Information (RTI) submission to HMRC must have been made between 20th March and 30th October notifying a payment of earnings for that employee.
Employees that were employed and on the payroll on 23rd September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for. The employer must have made a PAYE RTI submission to HMRC from 20th March 2020 to 23rd September 2020, notifying a payment of earnings for those employees.
Similarly, an employee who was on a fixed-term contract, on payroll on 23rd September, and that contract expired after 23rd September can be re-employed and claimed for, provided that the other eligibility criteria are met.
Claim calculations may differ from employee to employee
For employees that meet the eligibility criteria, and were previously furloughed, employers must use the same calculations for calculating reference pay and usual hours as before.
For an employee who meets the criteria of the extended scheme but was not previously eligible for CJRS, the alternative calculations of reference pay and usual hours must be used. For all other employees, employers must use the CJRS calculations for calculating reference pay and usual hours, details of which can all be found on the government website.
Employees unable to work may be furloughed
If an employee is required to shield in line with public health guidance for themselves or someone they live with, they can be placed on furlough. This also applies to anyone who has additional caring responsibilities resulting from COVID, including the need to look after children.
Employees who fall ill with Coronavirus or anything else whilst on Furlough must receive at least Statutory Sick Pay, it is up to the employer to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate.
During furloughed hours employees cannot carry out any work for their employer
The rules during hours of furlough remain the same – training is allowed but work that provides a service or generates money for the employer is not. Additionally, you are allowed to do volunteer work or take additional paid employment with another employer but this must be agreed upon in advance.
Usual taxes must continue to be paid
Whether furloughed or not, employees will still pay the taxes they usually pay out of their wages.
Employers must deduct and pay to HMRC Income Tax and National Insurance Contributions on the full amount they pay the employee, including any scheme grant. Employers must also continue to pay employers’ national insurance contributions on the full amount they pay the employee.
Certain records must be kept on file for up to 6 years
Once it has been decided who is to be furloughed, this needs to be confirmed in writing to the relevant employees. The employee is not required to provide a written response however the written agreement must be kept on file for 5 years. Additionally, records of how many hours an employee has worked and how many hours an employee has been furloughed must be kept for 6 years.
Response to the extension of the scheme
There has been a mixed response to the extension of the scheme. Workers who were made redundant before the October deadline are dismayed whilst employers are concerned for employees who may face a full year on furlough. Whilst the announcement is unsettling and doesn’t offer much hope for the short term, it is a relief to see the support is continuing throughout the UK.
As we wait in anticipation for further guidance to be released, we hope these details provide some level of clarity in the interim. If you have any queries relating to the extended coronavirus job retention scheme then please do not hesitate to get in touch with us via email, [email protected], or call 0800 112 0880.
Published: 6th November 2020
All information correct at the time of publishing.