It has been confirmed by the Chancellor, Rishi Sunak, during the Budget that the Coronavirus Job Retention Scheme (CJRS) (also referred to as the furlough scheme) has once again been extended and will remain in place until the end of September 2021.
Upon announcing the extension, the Chancellor confirmed that the scheme will continue to pay 80% of employee’s wages until the end of June (up to a monthly cap of £2,500 per employee). For the period July to the end of September, the financial support from the Government will reduce with employers paying:
- 10% towards their employees’ wages in July (with the Government paying 70%); and
- 20% in August and September (with the Government paying 60%).
As has previously been the case, employers will continue to be responsible for paying National Insurance (NICs) and pension contributions.
Below, we have outlined how the CJRS will continue to operate and answered a number of other queries in relation to the scheme.
How does the CJRS work?
The rules of the extended CJRS are as follows:
- The CJRS is available regardless of whether the employer or employee has previously used the CJRS and covers employees who were on the employer’s PAYE payroll as at 11.59pm on Friday, 30th October 2020.
- Businesses can claim in respect of the hours that their employees are not working (either all or part of their normal working hours – i.e. flexible furlough).
- Employers can place employees on furlough for any amount of time and any work pattern and can still claim the grant for the hours not worked.
- There is no maximum number of employees that a business can claim for under the CJRS.
- For hours not worked, the Government will pay 80% of wages (which must be paid by the employer to the employee in full) up until the end of June with the financial support reducing in July – 70% with employers paying 10% – and August and September – 60% with employers paying 20%. Employers must continue to pay employer NICs and pension contributions.
- For worked hours, employers must pay their employees in the normal way.
- Workers being placed on furlough leave who were employed by that employer prior to Thursday, 19th March 2020 or who have previously been furloughed will continue to have their reference pay and hours based on previous calculations.
- For workers who started more recently and weren’t previously placed on furlough leave, they have a different pay/hours reference period which is based on 80% of the employees’ wages payable in the last pay period ending on or prior to Friday, 30th October 2020 (this applies for periods starting after Sunday, 1st November 2020) (workers on fixed wages). For those on variable wages, the reference pay will be calculated on 80% of the average payable wages between the start date of employment or Monday, 6th April 2020 (whichever comes later) and the day prior to their furlough leave period commencing.
- As previously under the CJRS, employers can choose to top-up their employees’ wages above 80%, at their own expense.
- All employers (individual employers, businesses, charities, recruitment agencies, public authorities and administrators) are eligible to claim as long as they have:
- A PAYE payroll scheme;
- Enrolled for PAYE online; and
- A UK bank account.
- All employees paid via PAYE can be furloughed as long as they were on their employer’s payroll as at 11.59pm on Friday, 30th October 2020 (and they had been included on a RTI to HMRC on or before this date) on any type of contract including apprentices, full-time, part-time and ‘zero hours’ contracts. Foreign nationals are also eligible to be furloughed.
- Employees on fixed-term contracts (these contracts can be renewed or extended during the furlough leave period) and individuals who are not employees but are paid via PAYE (e.g. company directors or agency workers) can also be furloughed.
- Workers returning from maternity leave need to give the statutory eight weeks’ notice to end maternity leave early in order to be placed on furlough leave and receive pay via the CJRS, which is generally more than Statutory Maternity Pay (SMP).
- An employer is not allowed to make a claim for any days during which an employee is serving their contractual or statutory notice period (including those who are due to retire or have handed in their resignation).
- The CJRS is not designed for employers to place employees on furlough leave for short-term sick absences. However, employees can be furloughed for business reasons whilst being off work sick. Employers can also furlough employees if they are clinically extremely vulnerable or at the highest risk of severe illness from coronavirus but it is their choice whether they choose to do so.
- Workers on furlough leave who become ill, regardless of whether it is Covid-19 or not, must be paid at least SSP. As previously under the furlough scheme, it is up to businesses to choose whether to move their workers onto SSP or keep them on furlough leave.
For further information on the rules of the furlough scheme, click here.
Timescales for submitting furlough claims
Furlough claims must be submitted within 14 days of the previous calendar month, as follows:
|Claim for furlough days in||Claim must be submitted by|
|February 2021||15th March 2021|
|March 2021||14th April 2021|
|April 2021||14th May 2021|
|May 2021||14th June 2021|
|June 2021||14th July 2021|
|July 2021||16th August 2021|
|August 2021||14th September 2021|
|September 2021||14th October 2021|
Claims cannot be submitted more than 14 days before than the period end dates outlined above.
A claim will only be allowed to be made after the above dates if there is a “reasonable excuse for failing to make a claim in time”.
Can employees who have recently been made redundant be rehired and placed on furlough leave?
Workers who were employed and on their employers’ payroll on Wednesday, 23rd September 2020 but were then made redundant or for other reasons stopped working for their employer after this date, can be re-hired and then placed on furlough leave. In order to do this, the employer will have to have made a PAYE Real Time Information (RTI) submission to HMRC from Friday, 20th March 2020 to Wednesday, 23th September 2020, notifying a payment of earnings in respect of an employee.
This rule also applies to employees who were on a fixed term contract, on a business’ payroll on Wednesday, 23rd September 2020, and whose contract expired after this date (assuming they meet other eligibility criteria).