Extended Furlough Scheme Update

In response to the recent Government announcement of a further lockdown coming into force this morning, the Government have extended the Coronavirus Job Retention Scheme (CJRS) or Furlough Scheme. The Chancellor has today announced that the scheme will remain open until 31 March 2021.

Employees should receive 80% of their current salary for hours not worked, up to a maximum of £2500. Employers will pay employer NICs and pension contributions for hours not worked. This runs until 31st January 2021, at which point the Government will review the economic circumstances to see if they have improved enough to ask employers to contribute more. The 80% can be reclaimed from HMRC but there are no details of how to do this yet.

Employers large or small, charitable or non-profit are eligible for the scheme, which will continue to run for at least the next month.

As with the previous furlough scheme, businesses will have the flexibility to bring furloughed employees back to work on a part time basis (flexible furlough) or they are able to furlough them full-time. Employers will be asked to only cover National Insurance and employer pension contributions.

The new extended scheme will operate in a similar way as the previous scheme, with businesses being paid upfront to cover wages costs. There will be a short period when HMRC will need to change the legal terms of the scheme and update the system and businesses will be reimbursed after that period for any wages paid out for workers who are on furlough. The Government will confirm shortly when claims can first be made in respect of employee wages during November, as this is updated, we will let you know.

Who is eligible?

Employers

• All employers with a UK bank account and UK PAYE schemes can claim the grant. The employer does not have to have previously used the CJRS.

Employees

• Employees must be on the employer’s PAYE payroll between 20 March 2020 and 30th October 2020. A Real-Time Information (RTI) submission must have been made for that employee on or before 30th October 2020.
• Employees can be on any type of contract. For employers who are flexibly furloughing employees, you are able to agree any working arrangements with employees. (As this is a change to the employee’s terms and conditions, this agreement must be mutual and any changes made to employee’s hours must be agreed in writing).
• Employees that meet the criteria and were previously furloughed, employers must use the same calculation for calculating pay and usual hours as they have done previously.
• For employees who meet the criteria for the extended scheme and were not previously furloughed, the alternative calculations for reference pay and usual hours must be used.
  • If an employee was not previously furloughed 80% of wages must be calculated for employees in the following way;
    • FIXED SALARY- 80% of wages payable in the last pay period ending on or before 30 October 2020;
    • WHOLE PAY VARIES- 80% of average payable between (dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough period begins.
• When claiming for the grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days. Employers will be asked to report the hours actually worked and the usual hours an employee would be expected to work in a claim period.
• For actual hours worked, employers will pay employees their usual wage and the usual pension, tax and NIC on those amounts.
• Employers are still able to choose to top-up employee wages above the 80% grant at their own expense if they so wish.

Employees can be furloughed where they are unable to work because;

• They are shielding in line with public health guidance (or need to stay at home with someone who is shielding);
• Have caring responsibilities resulting from coronavirus, including employees that need to look after children.

The CJRS is not intended for employees who are on short term absence, however; if employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so.

Furloughed employees who become ill due to coronavirus or any other cause must be oaid at least SSP. It is up to the employer to decide whether to move these employees onto SSP or to keep them on furlough at their furloughed rate.

As previously, during hours recorded as furlough, employees cannot work for their employer. They can however;

• Partake in training (they must be paid their usual wage for this)
• Volunteer for another employer or organisation
• Work for another employer (if contractually allowed).

How can an employer claim?

The employer must:

• Report and claim for a minimum period of 7 consecutive calendar days;
• Report actual hours worked and usual hours expected to work in a claim period

When an employer is submitting their claim, the claim period must be start and end in the same calendar month.

If the pay period includes days in more than one month, each of the claims will need to be calculated separately. Claim periods cannot overlap and each employee claimed for, will need to be included in each separate claim made.

Employers are able to claim from 8am on Wednesday 11 November 2020. Claims can be made;

• In respect of an employee for a minimum 7 day claim;
• In advance
• In arrears for the period from 1 November 2020 to 11 November 2020, from the week commencing 9 November 2020.

Claims relating to November 2020 must be made by 14 December 2020. Claims relating to each month thereafter should be submitted by day 14 of the following month, to ensure prompt claims following the end of the month which is the subject of the claim.

The closing date for claims up to an including 31 October 2020, remains as 30 November 2020.

Grants are anticipated 6 working days after the first claims.

Full guidance on details of the extended scheme and how to claim will be released on 10 November 2020. We will of course provide an update when this becomes known to us.

The Job Support Scheme that was initially due to take over from the furlough scheme has been put on hold.

The Job Retention Bonus (JRB) will 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. However, as the CJRS is now being extended to 31 March 2021, the policy intent of the JRB no longer applies.

This advice is based upon the Governmental and ACAS guidance as at the time of this email.

If you have any questions on the employment guidance outlined above, or have any business related queries you would like our support with, then please feel free to contact us.