In conjunction with England being placed back into lockdown from 5 November 2020 (ending on 2 December 2020), the Chancellor has announced that the Coronavirus Job Retention Scheme (“CJRS”, or the “furlough scheme”) will be extended until the end of March 2021, with the caveat that the policy will be reviewed by the government during January 2021. CJRS was originally only due to be extended up to 2 December 2020, but the Chancellor has announced a further extension today.
The Chancellor has also confirmed in the House of Commons that CJRS will continue to be available throughout the UK if the lockdown in England comes to an end on 2 December 2020 as scheduled, irrespective of what tier of local restrictions a particular region is placed back into.
CJRS was due to come to an end on 31 October and be replaced from 1 November with the Job Support Scheme (“JSS”). However, according to government guidance, JSS will now be postponed until CJRS comes to an end.
What support will be available?
CJRS support from the government has been tapering off since July in anticipation of the transition to JSS. In August, the government was still covering 80% of employee salaries up to £2,500 per month, but stopped covering employer NICs and pension contributions. In September, the government only covered 70% of employee salaries up to £2,187.50 per month, with employers liable for the remaining 10% of salaries. In October, government support tapered off again, falling to 60% of employee salaries up to £1,875 per month, with employers liable for the remaining 20% of salaries.
Throughout this time, the CJRS has also been “flexible”, meaning that employees have been able to return to work part-time at the employer’s cost. The employer has then been able to claim CJRS support for the remainder of the employee’s usual full time hours which they haven’t worked. The cap on the amount that the employer can claim from the government under CJRS is reduced pro rata in accordance with the proportion of usual hours that the employee has returned to work for. So if an employee has returned to work for 50% of their usual hours, the employer can claim 80% of the employee’s wages for the other 50% of the hours not worked, up to a cap of £1,250 in August, £1,093.75 in September, or £937.50 in October.
The extension to the CJRS effectively winds the clock back to August: the government will not cover employer NICs and pension contributions, but will cover 80% of employee salaries up to £2,500 per month. CJRS will also remain flexible – employees will be able to return to work part-time and be paid in full for the hours they do work by their employer, and their employer will be able to claim CJRS support for the remainder of their usual hours which they have not worked. The Chancellor has indicated that employer contributions may be increased when CJRS is reviewed in January 2021 if the economic outlook is more favourable.
Who is eligible?
Based on the guidance available so far (fn.2), all employers with a UK bank account and UK PAYE scheme are eligible. There is no need for the employer to have previously claimed under CJRS in respect of the employees they choose to place on furlough.
The government has stated that it “expects” that publicly funded organisations will not use the CJRS, as was already the case. However, it is open to claims from partially publicly funded organisations where their private revenue streams have been disrupted. All other eligibility criteria will also apply. HMRC will publish details of employers who make claims under the extended CJRS scheme, starting from December.
There is no requirement for any employee to have been previously placed on furlough for them to benefit from the scheme now.
However, employees must be on an employer’s PAYE payroll by 23:59 on 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
The following guidance from the government should also be noted (fn.2):
- Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.
- Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.
- When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of seven consecutive calendar days.
- Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
- For worked hours, employees will be paid by their employer subject to their employment contract. Employers will be responsible for operating PAYE (deducting income tax and employee NICs) and accounting for employer NICs on all amounts it pays to employees, including pay for part-time work completed and any furlough amounts.
- Employees who are unable to work because they are shielding in line with public health guidance or have caring responsibilities resulting from coronavirus may benefit from CJRS.
How to claim?
The extended CJRS will work in the same way as the previous scheme did, in that:
- employers must report and claim for a minimum period of 7 consecutive calendar days
- employers will need to report actual hours worked and the usual hours an employee would be expected to work in a claim period
- for hours worked, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
There will also be no gap in eligibility of support between the previously announced end-date of CJRS on 31 October 2020 and this extension starting 1 November 2020.
It will be possible to make claims under CJRS from 8am on Wednesday 11 November 2020. Claims relating to November 2020 will need to have been made by 14 December 2020, and it is expected that grants will be paid 6 working days after claims are first made.
Full guidance including further detail on how to claim under CJRS will be published on 10 November 2020.