The Government has updated its CJRS guidance to reflect the extension of the scheme. In total there are 12 different guidance documents relevant to the extended CJRS. Links to this guidance are set out below:
- Check if you can claim for your employees’ wages – sets out eligibility requirements and how much you can claim.
- Check which employees you can put on furlough – those employees for whom employers can claim under the CJRS, including those eligible to be rehired if they were made redundant on or after 23 September 2020.
- Other types of employees you can claim for – covers different categories of PAYE workers, including office holders (such as company directors), agency workers and salaried members of LLPs.
- Steps to take before calculating your claim – includes deciding the length of a claim period, what to include when calculating wages and how to work out an employee’s usual and furloughed hours.
- Calculate how much you can claim – details of how to calculate pay for your furloughed employees and how much you can claim back, including record-keeping obligations.
- Claim for wages – lists the information you will need before making a claim and explains how to make a claim through the Government Gateway.
- Examples of how to calculate – worked examples of how to calculate employees’ wages, National Insurance contributions and pension contributions.
- Reporting employees’ wages to HMRC – how and when to report employees’ wages to HMRC using the PAYE Real Time Information system.
- Full examples of how to calculate for flexibly furloughed employees – the full sequence of calculation steps an employer must take when claiming for employees who are flexibly furloughed.
- Pay Coronavirus Job Retention Scheme grants back – how to pay all or some of the grant back if you have over claimed or want to make a voluntary repayment.
- Holiday entitlement and pay during coronavirus – to assist employers in understanding how these rights operate during the pandemic (note, this guidance has not been updated).
- Check if your employer can use the Coronavirus Job Retention Scheme – guidance aimed at employees to explain whether they are eligible and how much their employer can claim under the scheme.
On 13 November 2020 the Government published its latest Treasury Direction, which sets out the detailed formal rules applicable to the extended CJRS up to 31 January 2021. A further Treasury Direction will be issued to cover the period from 1 February to 31 March 2021.
Employers who have already made use of the CJRS will be broadly familiar with the operation of the scheme, but the publication of the revised guidance and Treasury Direction has highlighted a few additional points for employers to be aware of, including an important change in respect of employees serving a notice period (see 'What can be claimed?' below).
Extended furlough scheme eligibility
The extended scheme is open to all employers, regardless of whether or not they have claimed under the CJRS before, and in respect of employees who have not previously been furloughed. Employees must have been on the employer’s PAYE payroll by 30 October 2020 in order to be eligible for furlough.
Employees who were on an employer’s payroll on 23 September 2020 and in respect of whom a PAYE RTI submission was made between 20 March and 30 October 2020, can be re-employed and furloughed if they were made redundant or stopped working after 23 September. Note that there is no obligation on employers to re-employ such employees, and the position in relation to claiming notice pay during furlough has now changed, meaning that this option is likely to be unappealing to most employers (see 'What can be claimed?' below).
An employer can claim in respect of any employees that have transferred to it as a result of TUPE or the PAYE business succession rules, provided they transferred on or after 1 September 2020 and were employed by either their old employer or new employer on 30 October 2020.
To reflect the updated guidance for individuals who are clinically extremely vulnerable, employees who are shielding and who cannot work from home can be furloughed, as can those with caring responsibilities.
As before, employees can be fully or flexibly (part-time) furloughed under the scheme, and employers must agree the proposed furlough arrangement with employees and record it in writing. There is no minimum furlough period, but the period claimed for must be for a minimum claim period of seven days. Employees can be rotated on and off furlough according to the needs of the business. During a period of furlough an employee is not permitted to undertake any work in relation to their employment.
Note that employers entering into a new furlough agreement with employees to retrospectively cover a period starting from 1 November 2020, had to do so by 13 November 2020.
Copies of the written furlough agreements must be kept for a period of five years and HMRC will be able to audit employers to check that they have correctly claimed under the terms of the scheme. Starting in December, HMRC is intending to publish certain information about employers who have claimed under the CJRS, presumably as part of its efforts to reduce fraudulent claims. This includes the name of the employer and the amount of the CJRS claim made by that employer, or a reasonable indication of the amount claimed. There will be an exception to this if HMRC is satisfied that publication of the information will expose the employer or any of its directors, officers or employees to serious risk of violence or intimidation.
What can be claimed?
The scheme will pay up to 80% of employees’ wages for any hours not worked, up to a maximum of £2,500 per month for an employee who is fully furloughed. Employers will be required to pay employer National Insurance Contributions and pension contributions for the hours not worked. This equates to the grants payable under the CJRS in August 2020. The level of the grant will be reviewed in January 2021.
The method of calculating an employee’s usual hours for the purposes of claiming under the scheme will depend on whether the employer has previously claimed in respect of an employee prior to 31 October 2020, or whether the employee was hired between 20 March and 30 October 2020 and the employer is claiming in respect of the employee for the first time on or after 1 November 2020.
Note that until 30 November 2020 employers can claim in respect of furloughed employees who are serving a notice period (but cannot claim in respect of a redundancy payment). However, under the updated guidance it now states that for claim periods starting on or after 1 December 2020 employers cannot claim for any days during which the furloughed employee is serving a contractual or statutory notice period. This will apply to those made redundant and serving a period of notice, as well as those serving notice for any other reason including if the employee has resigned. This significant change to the rules is likely to restrict the number of individuals that employers are prepared to re-employ in order to put on furlough, unless they are confident that jobs will be secure when the CJRS comes to an end.
Deadlines for making a claim
Claims for furloughed employees up to 31 October must be made by 30 November. Claims in respect of employees furloughed under the extended scheme for periods starting on or after 1 November must be made no later than 14 December, and thereafter no later than 14 calendar days following the month claimed for.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at November 2020.