Furlough Extended……
Firstly to our readers apologies for the silence of late we have been busy building the schedule for this year and we have exciting things to come (oh and obvious Christmas and New Year kept us pre-occupied!). But here we talk about the extended furlough scheme.
The Chancellor announced on 17 December 2020 that the Coronavirus Job Retention (Furlough) Scheme (CJRS) which was initially extended to 31 March 2021 will now be extended until 30 April 2021. At the same time, the Government announced it will continue to fund 80 per cent of the employee’s salary (subject to the cap) for unworked hours until the scheme ends. This means that employers using the scheme will need to pay wages, NICs and pension contributions for worked hours and NICs and pension contributions only for unworked hours until the scheme ends.
In addition to this the announcement the Chancellor also confirmed that the Budget will take place on 3 March 2021. This is expected to set out the next phase of the Government’s support plan to overcome the virus and protect jobs. We will update our blog when this next announcement takes place.
Guidance on the eligibility and logistics of the extended CJRS were published on 10 November 2020 and this again was followed by a Treasury Direction published on 13 November.
The extended CJRS is significantly more generous to employers than the reduced level of government support on offer under the proposed Job Support Scheme, the introduction of which has now been postponed. The Job Retention Bonus has been withdrawn, although a replacement retention incentive has been promised but there are no details in respect of this yet.
HMRC has also announced that it intends to publish details of employers' CJRS claims from February 2021. The data to be made public includes:
The name of the employer and their company number;
The value of claims made within a banded range.
The published details will only relate to claims made after 1 December 2020. From February 2021, furloughed employees will also be able to see details of claims made for them after 1 December 2020 in their personal tax account. This I suspect is to help combat the issue of furlough fraud.
So what are the key changes to the scheme..?
The extended CJRS will operate as the original CJRS did, with businesses being able to be paid upfront (as opposed to in arrears under the JSS) to cover wage costs.
The key changes are:
The level of grant under the extended CJRS is identical to the previous CJRS from August. This means that the Government will pay up to 80 per cent of an employee’s normal pay or £2,500 (which ever is lower) and employers will be responsible for National Insurance Contributions and pension contributions. As with the original CJRS, employers are still able to choose to top up employee wages to 100% at their own expense if they wish.
There is no need to have accessed the scheme previously. This is a significant change to the original CJRS, where employees needed to have been furloughed for a period of at least three consecutive weeks ending on or before 30 June 2020 in order to benefit from the scheme.
There is also no limit on the maximum number of employees that an employer can claim for from 1 November 2020.
The new guidance confirms that employers are able to furlough employees who are unable to work because they are clinically extremely vulnerable, or at the highest risk of severe illness from coronavirus and following public health guidance or who are unable to work because they have caring responsibilities resulting from COVID-19, including employees that have child care issues - particularly in light of the second school closure.
As with original CJRS, a new employer is eligible to claim in respect of employees of a previous business transferred if the TUPE or PAYE business succession rules apply.
Employers will not be able to claim for employees who are serving contractual or statutory notice for claim periods on or after 1 December. We are thankful for the clarification on this point given the original CJRS left this out completely. Notice is said to include where
employees have resigned;
where notice was served before 1 December (although claims for notice in the period before 1 December are permitted).
These restrictions may however cause issues were employers are considering re-employing, or have re-employed, people in order to take advantage of the scheme extension. Employers will need to bear this in mind.
What businesses can apply?
All UK employers, (including individuals who employ people), which operated a PAYE scheme on or before 30 October and have a UK bank account are eligible to make a claim, whether their business remains open or closed. The government expects that publicly funded organisations will not use the extended scheme, as was the case for the original CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements will continue to apply.
Importantly the Direction also states that HMRC must publish information about employers who make claims which, includes the employer’s name and the amount claimed under the CJRS although HMRC may publish a ‘reasonable indication of the amount claimed’ rather than the exact amount. Information must be published within 3 months from the end of the month for which a claim was made. The information will be taken down 12 months after publication.
Which employees are eligible?
Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Employees can also be furloughed if they are a foreign national and meet the eligibility criteria.
An employer can claim for an employee if they were employed on 30 October 2020, as long as they have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020. This may differ if the employee was made redundant, or stopped working for them on or after 23 September 2020 and they are then re-employed .
However, employers will need to consider very carefully the implications of rehiring an employee particularly if employees on notice are not eligible for grants under the scheme - as this cost may have to be born by the employer.
Can businesses still use flexible furlough?
Employers are still able to flexible furlough their staff, in addition to full-time furloughing, so employees will be able to work some of their hours (and be paid for this by their employer) and receive furlough pay for unworked hours. See our blog on flexible furlough here.
Putting into place agreements retrospectively
Given the late timing of the announcement it is not surprising that the guidance states that employers may put into place furlough agreements retrospectively to have effect from 1 November, but makes it clear that 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.
It is advisable to keep all written records of the agreement for 5 years and a record of how many hours the employee worked and the number of hours the employee was not working and on furlough, will need to be kept for 6 years.
Key links to the current government guidance:
Guide for employers to check if they can claim under the CJRS
Guide for employers to check which employees they can put on furlough to use the CJRS
Check if you can claim for employees' wages through the CJRS
We acknowledged that this is an extremely worrying and stressful time for all our readers, and we hope the above assists you. If you would like any further information on the above or any employment law related matters then please do contact us.
