Coronavirus Job Retention Scheme extended until March 2021 UPDATED

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The Chancellor has announced today (November 5) that the Coronavirus Job Retention Scheme (CJRS) will be extended until March 31, 2021. 

For claim periods running to January 2021, 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 rules to the scheme will remain the same, except where stated otherwise.

The government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.

Claims can be made by employers across the UK that meet the eligibility criteria.

Employers who can claim under the extension

Employers across the UK can claim, whether their businesses are open or closed.

Employers do not need to have used the CJRS previously.

Employees furloughed under the CJRS extension

Employers can claim for employees who were employed and on their PAYE payroll on October 30, 2020.

The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between the March 20, 2020 and October 30, 2020, notifying a payment of earnings for that employee.

Employers will have flexibility to use the scheme for employees for any amount of time or shift pattern, furloughing employees on either a full-time or part-time basis, and will be able to vary the hours worked in agreement with the employee.

As under the current CJRS rules, employees can be on any type of employment contract.

Employees not claimed for previously under CJRS

Employees do not need to have been furloughed under the CJRS previously.

For employees that meet the eligibility criteria, and were previously furloughed, employers must use the same calculations for calculating reference pay and usual hours as CJRS.

For an employee who meets the criteria of the extended scheme but was not previously eligible for CJRS, the alternative calculations of reference pay and usual hours must be used.

For all other employees, employers must use the CJRS calculations for calculating reference pay and usual hours.

Employer contributions during the CJRS extension until January will be the same as in August 2020.

This means that for hours not worked by their employee, employers will only be asked to cover National Insurance and employer pension contributions.

The government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.

Employers will have to pay the employee’s wages for the hours they work as normal, as well as employer National Insurance and employer pension contributions.

Employees whose health has been affected by coronavirus or other conditions

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 short-term sick absences.

If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees.

Furloughed employees who become ill, due to coronavirus or any other cause, must be paid at least Statutory Sick Pay (SSP).

As under the CJRS previously, it is up to employers to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate.

Employees re-employed by their employer

Employees that were employed and on the payroll on September 23, 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for.

The employer must have made a PAYE Real Time Information (RTI) submission to HMRC from March 20, 2020 to September 23, 2020, notifying a payment of earnings for those employees.

Similarly, an employee who was on a fixed term contract, on payroll on September 23, and that contract expired after September 23 can be re-employed and claimed for, provided that the other eligibility criteria are met.

When employees are on furlough

As under the CJRS previously, during hours which employees are recorded as being on furlough, they cannot do any work for their employer that makes money or provides services for their employer or any organisation linked or associated with their employer.

Employees can:

  • take part in training
  • volunteer for another employer or organisation
  • work for another employer (if contractually allowed)
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Employee rights

Employees will retain their rights at work, including:

  • SSP
  • annual leave
  • maternity and other parental rights
  • rights against unfair dismissal
  • redundancy payments
  • to be paid at least statutory National Minimum Wage for hours worked

In addition, as with the current CJRS:

  • the Working Tax Credits working hours easement will apply for the period of this CJRS extension
  • for employees on statutory parental leave, there will be no change from CJRS

Paying employees’ taxes

Employees will still pay the taxes they normally pay out of their wages.

Employers must deduct and pay to HMRC Income Tax and employee National Insurance contributions on the full amount that they pay the employee, including any scheme grant.

The CJRS grant does not cover employers’ National Insurance contributions or pension contributions.

Employers must also pay to HMRC the employer National Insurance contributions on the full amount that they pay the employee, including any scheme grant.

Employer – employee agreement

Employers do not need to place all of their employees on furlough and they can fully furlough employees if they wish. Employees cannot undertake any work for their employer during the hours that the employer records them as being on furlough.

There is no minimum furlough period.

Flexible furlough agreements can last any amount of time.

Employees can enter into a flexible furlough agreement more than once.

Although flexible furlough agreements can last any amount of time, unless otherwise specified the period claimed for must be for a minimum claim period of 7 consecutive calendar days.

Employers can:

  • fully furlough employees – this means the employee does no work for the employer
  • flexibly furlough employees – this means employees can work for any amount of time, and any work pattern and claim the grant for the furloughed hours, with reference to hours the employee would usually have worked in that period

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the CJRS process, including deciding who to offer furlough to, employment, equality and discrimination laws will apply in the usual way.

To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed or flexibly furloughed.

Employers must:

  • make sure that the agreement is consistent with employment, equality and discrimination laws
  • keep a written record of the agreement for 5 years
  • keep records of how many hours their employees work and the number of hours they are furloughed (for example, not working), for 6 years

The employee does not have to provide a written response and employers do not need to place all their employees on furlough.

The terms of any agreement must:

  • reflect the hours the employee has actually worked or not worked over the period of the agreement
  • allow the employer to satisfy the terms of CJRS so they can make a claim in relation to hours not worked

Where consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a CJRS claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a CJRS claim.

What employers can claim

This policy paper applies for CJRS claims for periods starting on or after November 1, 2020.

The closing date for claims up to and including October 31 remains November 30, 2020, using existing CJRS guidance.

All employees on an RTI submission on or before March 19, 2020 will be able to use the CJRS calculations as applied in August 2020 for reference pay and usual hours.

However, for new employers claiming and new employees hired between March 20, 2020 and October 30, 2020 the CJRS methodology will update the reference pay and usual hours to take account of the period covered by the extension.

For employees on fixed pay employed on or after March 20, 2020, the last pay period prior to October 30, 2020 provides the basis for calculation.

For employees on variable pay or hours, employed after March 20, the average of tax year 2020 to 2021 up to the start of the furlough provides the basis for calculation.