The Government issued updated guidance on the Coronavirus Job Retention Scheme (CJRS) extension on 10 November 2020. Under the current terms of the extended CJRS, for claim periods commencing 1 November 2020, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The £2,500 cap is proportional to the hours not worked. The government will review the policy in January 2021 to decide whether economic circumstances are improving enough to ask employers to contribute more.
STRUCTURE OF THE FURTHER EXTENTION TO THE CJRS
You will be able to claim the grant for the hours that your employees are not working, calculated by reference to their usual hours worked in a claim period. When claiming for furloughed hours, you need to report and claim for a minimum period of seven consecutive calendar days. CJRS grants must be paid in full to your employee. Until 31 January 2020, you will continue to be responsible for employer’s NICs and pension contributions.
You will of course pay your employee 100% of their standard hourly salary for any hours worked during these months.
There is also still the option to top up the employee’s wages above the scheme grant at your own expense. This reflects the previous flexible furlough arrangements. If you have previously topped up employee wages to 100% but no longer wish or cannot afford to do so, you may need a new or extended furlough agreement if you want to reduce furlough pay between now and either January or March (depending on how the terms of the existing agreement were framed).
Under the original CJRS scheme, an employee could be furloughed if they were previously furloughed for 3 weeks prior to 30 June 2020 and a claim was made by 31 July 2020. Marking a significant change to the rules, this is not the case for the extended furlough scheme; your employee does not need to have been previously furloughed in order to qualify. Instead, they need to have been on the payroll by 23:59 30th October 2020 and after 00:01 20th March 2020. This means that at least one Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made between 20th March 2020 and 30th October 2020. Overpaid claims must be paid back to HMRC.
You will be able to furlough with effect from 1 November even if you were not able to get an agreement in place before this. However, you will need to act quickly. It is possible to backdate to 1 November 2020 provided that a retrospective agreement is put in place by the end of Friday 13 November 2020. This backdated agreement will be dependent on the employee genuinely having been furloughed during this time. If the employee has actually been working all of their usual hours, furlough cannot be backdated.
There is no minimum flexible furlough period. However, any claim through HMRC’s portal will need to cover a period of at least one week unless you are claiming for the first few days or last few days in a month. You can only claim for a period of fewer than 7 days if the claim period includes either the first or last day of the calendar month, and you have already claimed for the same employee for the period immediately before it (known as an ‘Orphan Period’). Claim periods must start and end within the same calendar month. A separate agreement can be made when re-furloughing an employee on subsequent occasions.
If the employee has previously been furloughed then you must use the same calculations for calculating reference pay and the same reference to usual hours as you did for the original CJRS scheme. If the employee was eligible under the original CJRS but no claim was made in respect of that employee (i.e. the employee hasn’t previously been furloughed) then again you use the same reference pay and same usual hours as you would have used under the original CJRS scheme.
If the employee was not previously eligible for the original CJRS but meets the criteria for the extended scheme then reference pay is:
• On a fixed salary – 80% of the wages payable in the last pay period ending on or before 30 October 2020; and
• For those whose pay varies – 80% of the average payable between (these dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their own CJRS extension furlough periods begins
This will of course apply to employers claiming for the first time.
If the employee has not previously been eligible for CJRS but meets the criteria for the extended scheme then the ‘usual hours ’ will be the average hours between:
• The start date of the 2020 to 2021 tax year, (for example, 6 April 2020); and
• The day before their CJRS extension furlough periods begins
This includes any hours that the employee received holiday pay for.
Where training is undertaken at your request the employee will be entitled to be paid at least the national minimum wage for this training.
HOW TO APPLY FOR THE CJRS
You are now able to apply for CJRS online (as at Wednesday 11 November 2020) for periods from 1 November 2020. You can claim for wages through the CJRS, clicking this link.
There are now monthly deadlines for claims, which must be submitted by 11:59pm 14 calendar days after the month they relate to, or the next working day where the 14th day falls on a weekend. For example, you will need to submit any claims for November 2020 by 11:59pm on 14 December 2020.
A claim under the old or original CJRS cannot be made after 30 November 2020 so you will not be able to add to that claim after that date.
COMPANY DIRECTORS AND ANNUALLY PAID EMPLOYEES
It is possible to make a claim for an annually paid employee including a director as long as an RTI submission has been made between 20 March 2020 and 30 October 2020 notifying HMRC of a payment of earnings to that employee or director.
The requirement for there to be payment of earnings between 20 March 2020 and 30 October 2020 applies for any employee being claimed for under the scheme, irrespective of how frequently they are paid (e.g. weekly, fortnightly or monthly). This will be relevant for those on an annual pay period if the last payment notified to RTI was before 20 March 2020 and no further payments were notified before 30 October 2020.
RE-HIRING AN EMPLOYEE
If your employee was employed and on the payroll on 23 September 2020 and they were subsequently made redundant or stopped working for you, they can be re-employed and claimed for. An RTI submission must have been made to notify payment to that employee between 20 March 2020 and 23 September 2020. This applies to fixed term contract employees too, provided that they were on the payroll at 23 September and the contract expired after 23 September 2020.
JOB RETENTION BONUS UPDATE
The Job Retention Bonus (JRB) will now not be paid in February 2021 and a retention incentive will be deployed at the appropriate time. The purpose of the JRB was to encourage employers to keep people in work until the end of January 2021. However, as the CJRS is now being extended to 31 March 2021, the policy intent of the JRB no longer applies. At this time, the guidance to the retention incentive is unclear.