On Thursday, November 5, Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS), often referred to as the furlough scheme, would be extended until the end of March, 2021.
In this article, we explain what the extension means and discuss which employers and employees are eligible.
What has changed?
When the CJRS was first launched back in March, the Government contributed 80% of a furloughed employees’ wages, up to a cap of £2,500 per month, as well as employer National Insurance (NI) and pension contributions.
From the beginning of November, the Government contributions will return to 80%, with the same £2,500 monthly cap, an increase in the amounts paid throughout September (70%) and October (60%). However, unlike when the CJRS was initially launched, employers will be responsible for all NI and pension contributions for their furloughed employees.
Timeline of the furlough scheme
March 2020
CJRS launched on March 20 and backdated to March 1. Government contributions begin at 80% of a furloughed employees’ wage, capped at £2,500 per month. Government contributions include employer National Insurance (NI) and pension contributions. The CJRS is initially planned to last just four months – March to June.
May 2020
On May 12, the Government announces that the CJRS will be extended until the end of October; however, it is also announced that the Government contributions will decrease month-on-month from August. Finally, it is confirmed that companies will be unable to furlough an employee for the first time beyond June 10.
July 2020
Flexible furloughing is introduced from the start of July. Furloughed employees are allowed to return to work on a part-time basis; however, employers become responsible for paying the entirety of an employee’s wage for the hours they work. The Government contribution remains at 80% for all unworked hours.
August 2020
Employers are required to begin paying the NI and pension contributions for furloughed employees. The Government continues to pay 80% of a furloughed employee’s wage.
September 2020
The Government’s wage contribution is reduced to 70% and employers have to pay 10% of their furloughed employees’ wage to meet the minimum 80% mark.
October 2020
The wage contribution is reduced again, this time to 60%. Employers must now contribute a minimum of 20% of furloughed employees’ wages.
November 2020
On October 31, the day the CJRS was due to end, Prime Minister Boris Johnson announces that it will be extended until December. The Government contribution returns to 80% (capped at £2,500 per month); however, employers remain responsible for NI and pension contributions. It is also announced that employees, for the first time since mid-June, can be furloughed for the first time.
November 5, 2020
Chancellor Rishi Sunak announces on November 5 that the furlough scheme will be extended until the end of March. The 80% contribution will be reviewed in January 2021.
Who is eligible for the CJRS?
Employers
All employers with a UK bank account and UK PAYE schemes can claim for the grant. The employer does not have to have previously used the CJRS to be eligible.
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Employees
To be eligible for the CJRS, employees must be on an employer’s PAYE payroll on October 30, 2020. This means that an RTI submission for that employee must have been made between March and before October 30, 2020.
Employees can be furloughed regardless of whether they have or have not been previously furloughed. This means that employers can, for the first time since June 11, furlough an employee for the first time.
If an employee is being furloughed for the first time, and was not employed on March 19 2020, the updated calculations and reference period must be used. For fixed salary employees this will mean 80% of the wages payable in the last pay period ending on or before October 30. Those on variable pay will receive 80% of the average payable between the start date of their employment or, April 6, whichever is later, and the day before their extension furlough period begins.
Any employee who has been previously furloughed, or has been employed since March 19 2020, will have their pay calculated based on the previous pay reference period. For fixed salary employees, this will relate to 80% of the last pay period ending on or before March 19.
All employees on variable pay will be eligible to receive the higher of either 80% of the wages earned in the corresponding calendar period in the tax year 2019 to 2020 or, the average wages payable in the tax year 2019/20.
Employees on all types of contract are eligible and, as with the original CJRS rules, employers will need to agree to any working arrangements with employees.
Those who are shielding or live with someone who is shielding are eligible, as is anyone who has caring responsibilities as a result of coronavirus.
Flexible furlough will also continue; however, employers can only claim for the hours that an employee does not work. The claimable amount can be calculated by reference to their usual working hours in a claim period. Naturally, employers will be responsible for paying employees for all hours worked.
Employer furlough grant claims should cover a minimum period of seven consecutive calendar days. Employers will need to report the hours worked and the usual hours an employee would be expected to work in a claim period to HMRC.
Employers remain entitled to top-up employee wages should they wish.
Can employees that have been made redundant be brought back?
An employee who has been made redundant or stopped working is able to be re-employed and placed on furlough provided that they meet one of two conditions:
- the employee was on an employer’s payroll on September 23 and a PAYE Real Time Information (RTI) submission including them, was sent on or before this date;
- they were made redundant or stopped working for their company on or after September 23.
How does an employer claim?
Employers will be able to make the first claim from 8 AM on Monday, November 11 and can be made:
- in respect of an employee for a minimum seven-day claim window;
- in advance;
- in arrears for the period from November 1 to November 11 from the week commencing Monday, November 9.
Claims for November must be submitted no later than December 14 and HMRC are anticipating that grants will be paid within six working days.
What about the Job Support Scheme?
The Job Support Scheme (JSS) was planned to come into effect from Sunday, November 1.
However, since the CJRS has been extended, the scheme has been withdrawn and postponed for the time being.
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