The Chancellor, Rishi Sunak, has announced that the Coronavirus Job Retention Scheme ("CJRS") is to be extended until 31 March 2021. The scheme was to close at the end of November with the Job Support Scheme taking over, however an announcement on 30 October confirmed CJRS (also known as furlough) would be extended to cover the current period of full lockdown in England. According to the UK Government the decision to extend the scheme again is to "give businesses security through the winter".
An HMRC Policy Paper has been published which is applicable to CJRS claims for the period starting 1 November 2020 and ending 31 January 2021. This provides updated details on eligibility criteria for employers and employees, what employers will need in order to claim and updated information on reference data to calculate claims. Key points are:-
- Employer contributions during the extension until 31 January 2021 will be as they were in August 2020 - so for hours not worked employers will only cover NIC and employer pension contributions with the UK Government contributing 80% of wages, for the time the employee spends on furlough, subject to the £2,500 cap (with the cap being proportional to hours not worked);
- Employers and employees need not have previously used CJRS;
- HMRC will publish details of employers who make claims under the extended scheme, starting from December 2020;
- For claim periods starting on or after 1 December 2020, an employer cannot claim for any days on or after 1 December 2020 during which the employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation).
- Eligible employees must be on their employer PAYE on 30 October 2020 and the employer must have made a PAYE Real Time Information submission to HMRC between 20 March 2020 and 30 October 2020 notifying a payment of earnings for that employee;
- The scheme can be used flexibly as it has been since July 2020 with employers being responsible for employee wages for the hours they work as normal;
- Employees who were on the payroll on 23 September 2020 and made redundant or stopped working for their employer (including due to expiry of a fixed term contract) after that date can be re-employed and claimed for;
- Employees who have previously been furloughed can continue to have their reference pay and hours based on the same calculations as under the old scheme;
- Employees who have not previously been furloughed will have a different pay and hours reference period, with further details to be published on 10 November;
- Where consistent with employment law, any flexible furlough or furlough agreement put in place on or before 13 November 2020 that has retrospective effect from 1 November 2020 will be valid for the purposes of a CJRS claim;
- Employers will be able to claim from 8am on Wednesday 11 November 2020 and all claims relating to November must be made by 14 December 2020;
- Claims relating to each subsequent month must be submitted by day 14 of the following month;
- The closing date for claims up to and including 31 October remains 30 November 2020.
Many aspects of the extended scheme, such as minimum claim periods, work that can be undertaken while on furlough and what happens if an employee becomes ill while on furlough remain the same. As previously furlough can also be used by employees who are shielding in line with public health guidance and those with caring responsibilities.
A review of the Scheme will take place in January to decide whether economic circumstances have improved enough for employers to be asked to increase their contributions. Meanwhile the Job Support Scheme has been put on hold and the Job Retention Bonus ("JRB") will no longer be paid in February 2021. The purpose of the JRB was to encourage employers to keep people in work until the end of January however as furlough has now been extended that is no longer required. The UK Government have confirmed an intention to redeploy "a retention incentive" at the appropriate time.
The third Self Employment Income Support Scheme ("SEISS") grant, covering November 2020 to January 2021 is also to be increased, being calculated at 80% of average trading profits up to a maximum of £7,500.
Further guidance is to be published on 10 November and we will keep you updated as more information becomes available.