Extension of furlough
On 3 March 2021, the Chancellor announced in his budget speech that the Coronavirus Job Retention Scheme (“CJRS”) would be extended until the end of September 2021, meaning it will continue to operate past its anticipated end date of 30 April 2021. Until July 2021, much will remain the same – employees will continue to receive 80% of their current salary for hours not worked (up to £2,500 a month) – but from 1 July 2021 the government will begin to taper off its support. Employers will be obliged to contribute towards 10% of the cost of an employee’s unworked hours in July and 20% of unworked hours in both August and September.
Beyond the introduction of tapering, discussed in more detail below, the existing rules of the CJRS are largely maintained. The changes to the CJRS applicable post-30 April 2021 are summarised below, but for greater detail on the existing rules, please see our previous update here.
Who can claim?
The details on who can claim remain the same, except that employers seeking to claim for periods from 1 May 2021 onwards must have registered a PAYE scheme with HMRC on or before 2 March 2021.
Which employees can an employer claim for?
For periods from 1 November 2020 to 30 April 2021, employers can claim for employees for whom they made a PAYE Real Time Information (RTI) submission between 20 March 2020 and 30 October 2020. Employees can be re-hired and furloughed during this period in accordance with the existing rules.
From 1 May 2021, an employer can claim for employees who were employed on 2 March 2021, as long as the employer made a RTI submission in respect of that employee to HMRC between 20 March 2020 and 2 March 2021. The employer need not have previously claimed for the employee prior to 2 March 2021.
However, it seems that the government guidance has not been updated to address a scenario where, after 30 April 2021, an employer is seeking to re-employ, and put on furlough, employees whose employment was terminated on or after 23 September 2020 (in the same way that it does for the period from 1 November 2020 to 30 April 2021). Whilst the wording noted above states that an employer does not need to have previously claimed for an employee before 2 March 2021 in order to claim for periods starting on or after 1 May 2021, it does not expressly state that this applies to employees who were dismissed or whose employment ended for other reasons. This may be due to the fact that the scheme was previously extended past its anticipated October 2020 end date without much warning, so some employers may have terminated the employment of certain individuals that they otherwise wouldn’t have. Employers were given more notice of the most recent extension.
Is there any guidance for specific categories of employee?
If an employer is seeking to claim for a period between 1 November 2020 and 30 April 2021 in relation to employees transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (TUPE), the transferred employees may be eligible to be furloughed if they were:
- transferred between 1 September 2020 and 30 April 2021;
- employed by their old or new employer on 30 October 2020; and
- on the new or old employer’s RTI submission to HMRC between 20 March 2020 and 30 October 2020.
If an employer is seeking to claim for a period beginning on or after 1 May 2021 and they employ someone who was transferred from another business, they may be eligible to be furloughed if they were:
- transferred on or after 1 January 2021;
- employed by the old employer on or before 2 March 2021; and
- on the new or old employer’s RTI submission to HMRC between 20 March 2020 and 2 March 2021.
Fixed term contracts
An employee’s fixed term contract can be renewed if it hasn’t already expired. If the contract has already expired, for periods prior to 1 May 2021, please refer to our previous guidance. For periods starting on or after this date, as with other employees, an employee who was on a fixed term contract can be furloughed as long as they were employed on 2 March 2021 and their employer made an RTI submission to HMRC between 20 March 2020 and 2 March 2021.
What can an employer claim?
From 1 July 2021, employers will be required to contribute towards the cost of an employee’s unworked hours. This changes the amount of an employee’s wage that can be claimed.
Until 30 June 2021, it remains the case that employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month (that cap being proportional to the hours not worked). Between 1 and 31 July 2021, government contributions will decrease from 80% to 70% and be capped at £2,187.50 for the hours the employee has not worked. Employers must contribute 10% of wages (up to £312.50) to make up the 80% total.
Between 1 August and 30 September 2021, government contributions will decrease again from 70% to 60% of wages and be capped at £1,875 for the hours the employee has not worked. Employers must therefore contribute 20% of wages (up to £625) to make up the 80% total.
Employers will continue to pay National Insurance contributions (NICs) and pension contributions in the same way that they have since 1 August 2020 and can still top up their employees’ wages above the 80% total and £2,500 cap for the hours not worked at their own expense.