The Coronavirus Job Retention Scheme (CJRS) was originally planned to end on 31 October 2020, with the replacement Job Support Scheme (JSS) set to launch immediately on 1 November 2020. In a last-minute change of plan, however, on 31 October the Prime Minister announced that the CJRS was to be extended in order to provide support to businesses and employees during the new national lockdown of England due to begin on Thursday 5 November. A further statement of the Chancellor on 5 November announced the CJRS extension will extend beyond the November lockdown until 31 March 2021.

While shelving the JSS and the Job Retention Bonus, the level of support available under the CJRS extension mirrors that available under the CJRS in August, with the Government paying 80% of wages for hours not worked, up to a cap of £2,500, and employers paying National Insurance contributions and pension contributions for those hours. Flexible furloughing is allowed under the extended CJRS, as well as full-time furloughing.

This is an extension of the existing CJRS rather than a new scheme. As such, the scheme rules will remain the same except where stated otherwise in Government guidance. Notable changes being:

  • neither the employer nor the employee needs to have previously used the CJRS, the scheme being available in respect of employees who were on the employer's PAYE payroll by 30 October 2020; and
  • in light of the speed and late notice of the CJRS extension, retrospective flexible furlough or furlough agreements may be made up to and including 13 November 2020.

Some details of the CJRS extension have been included in the Policy paper: Extension of the Coronavirus Job Retention Scheme that was published on 5 November, with full guidance to be published on 10 November.

What we know so far…

1. What financial support is available under the CJRS extension?

The level of support available under the extended CJRS mirrors that available under the scheme in August:

  • 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.
  • Employers to pay employer National Insurance Contributions (NICs) and pension contributions for the no worked hours claimed under the scheme.
  • Employers can choose to top up employee wages but do not have to do so.

2. When does the CJRS extension run to?

The CJRS extension began on 1 November 2020 and will run until 31 March 2021.

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

3. What type of furlough is permitted?

Flexible furloughing is allowed under the extended CJRS, as well as full-time furloughing.

Employees can be asked to work on a part-time basis and be furloughed for the rest of their usual working hours. Employers will have flexibility to use the scheme for employees for any amount of time or shift pattern and will be able to vary the hours worked in agreement with the employee.

For worked hours, employers must pay employees according to their employment contract and will be responsible for paying the tax and NICs due on those amounts.

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 seven consecutive calendar days.

4. Which employers are eligible to claim?

Employers do not need to have used the CJRS previously.

The CJRS extension applies to employers across the whole of the UK and whether their business is closed or open.

All employers with a UK bank account and UK pay as you earn (PAYE) schemes can claim the grant, although as with the original CJRS, the Government expects that publicly funded organisations will not use the scheme. Partially publicly funded organisations may be eligible where their private revenues have been disrupted.

Further details will be provided in the 10 November guidance.

5. Which employees are eligible to be claimed for?

Importantly, the employee does not need to have been furloughed previously under the CJRS. Since July, employees have only been eligible for the CJRS if they had been validly furloughed for at least a three week period before 30 June. Now those employees who had been excluded over the summer will be eligible under the extension, as well as recent starters.

The scheme is available in respect of employees, on any type of contract, who were on the employer's PAYE payroll on 30 October 2020. A Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made between 20 March 2020 and 30 October 2020.

If employees were on the employer's PAYE payroll on 23 September 2020 (i.e. notified to HMRC on an RTI submission on or before 23 September) and were made redundant or stopped working for the employer afterwards, they can also qualify for the scheme if the employer re-employs them.

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

6. Can employees who are sick, shielding or who have caring responsibilities be furloughed?

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 can 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.

7. What restrictions apply in relation to non-working hours?

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).

8. What agreement is required?

As previously under the CJRS, 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 process, including deciding who to offer furlough to, 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. The employee does not have to provide a written response.

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.

In light of the speed and late notice of the CJRS extension, retrospective flexible furlough or furlough agreements may be made up to and including 13 November 2020. A retrospective agreement will have effect from 1 November 2020 for the purposes of a CJRS claim as long as it is made according to the conditions above.

9. How are reference periods and usual hours to be calculated?

The policy paper states "all employees on an RTI submission on or before 19 March 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 20 March 2020 and 30 October 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 20 March 2020, the last pay period prior to 30 October 2020 provides the basis for calculation. For employees on variable pay or hours, employed after 20 March, the average of tax year 2020 to 2021 up to the start of the furlough provides the basis for calculation."

The policy paper goes on to stress that for employees who were previously eligible for the CJRS, the calculation rules will remain the same, even if a claim was not made in respect of that employee prior to 1 November 2020.

Full details of calculations will be shared in guidance on 10 November 2020.

10. How and when can claims be made?

The CJRS extension will operate as the previous scheme did, in several respects:

  • Employers must report and claim for a minimum period of seven consecutive calendar days.
  • Employers will need to report actual hours worked and the usual hours an employee would be expected to work in a claim period.
  • The claim period must start and end within the same calendar month. If the pay period includes days in more than one month, each of those claims will need to be calculated separately. Claim periods cannot overlap, and employees claimed for will need to be included in each separate claim made.

Employers will be able to claim either shortly before, during or after running payroll. In terms of practicalities, there will be a short transition period whilst HMRC update the scheme and businesses will be paid in arrears for that period. There will be no gap in eligibility for support between the previously announced end date of CJRS and this extension.

Employers will be able to claim from 8am on Wednesday 11 November 2020 in respect of an employee for a minimum seven day claim window in advance or in arrears for the period from 1 November 2020 to 11 November 2020.

Claims relating to November 2020 must be made by 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month.

Grants payments are anticipated six working days after the first claims.

Full guidance including further detail on how to claim will be published on 10 November 2020.

11. What happens to the Job Retention Bonus and the Job Support Scheme?

Due to the CJRS extension, the Job Retention Bonus falls away and will not be paid in February 2021 with any retention incentive instead to be deployed at a future "appropriate time". The purpose of the JRB was to encourage employers to keep people in work until the end of January.

Due to the CJRS extension, the Job Support Scheme is simply shelved until further notice.

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Originally Published By Gowling, November 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.