Coronavirus Job Retention Scheme extension – full guidance released
On 5 November 2020, Chancellor Rishi Sunak announced the extension of the Coronavirus Job Retention Scheme (CJRS) until 31 March 2021. HMRC released the full details of the extension and official guidance on Tuesday 10 November.
The purpose of this article is to summarise the main points raised in the recent guidance. We have also updated our full guidance to include the changes and illustrative examples, which can be downloaded by clicking the following link:
What are the key points?
1. Employers who have not previously furloughed anyone can use the CJRS as employers do not need to have submitted a claim under the CJRS prior to 31 October in order to claim under the extended CJRS.
2. Employers will also be able to claim a grant under the CJRS in respect of employees who have not previously been furloughed, provided that the employee was employed and on the employer’s payroll on 30 October 2020 (and provided the employer had made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying HMRC of a payment of earnings for that employee).
3. There is now no maximum number of employees that can be claimed for from 1 November 2020.
4. Employees who were made redundant in the run up to the end of the original CJRS can be re-hired. Employees who were made redundant or who stopped working for their employer on or after 23 September 2020 can be re-employed and furloughed by their former employer. To be eligible, such employees must have been employed by their employer on or before 23 September 2020 (and the employer must have made a PAYE RTI submission to HMRC between 20 March 2020 and 23 September 2020 in respect of them). Employees on fixed-term contracts that have expired since 23 September can also be re-employed and claimed for.
5. HMRC can publish the names of those employers claiming under the extended CJR. From December 2020, HMRC will publish employer names and company registration numbers for those companies and LLPs who have made claims under the CJRS for the month of December onwards.
6. Flexible furloughing is still available. From 1 November 2020, employers can continue to either fully furlough employees (where they do not undertake any work) or flexibly furlough employees (where they work for a portion of time and are on furlough for the remainder).
7. From 1 November 2020, employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. In November and December 2020 and January 2021, employers will only be required to pay National Insurance Contributions and pension contributions.
8. Employers need to get written agreement from the employee to put them on furlough.
9. Furlough letters can be backdated to 1 November 2020 but the deadline by which this agreement needs to be in place is Friday 13 November 2020.
10. The guidance says that the government is reviewing and will be changing the approach in relation to notice periods and notice pay for claim periods starting on or after 1 December 2020. Further guidance on this is due to be published later this month. If employers do wish to use the CJRS to cover notice pay during all or part of an employee’s notice period, they now have limited time in which to do this.
11. There is updated guidance on the reference period for working out “usual wages”. There are now two different reference periods that can apply:
The previous CJRS calculations in respect of “usual wages” will apply to all employees who were eligible under the original CJRS, even if a claim was not made in respect of that employee before 1 November 2020. So, this applies to two categories of employee:
1. Those employees who were on the employer’s payroll on 19 March 2020 (where their employer made a payment of earnings to them in the tax year 2019 to 2020 which was reported to HMRC on a RTI Full Payment Submission on or before 19 March 2020); and
2. Those employees who were furloughed in a claim period ending any time on or before 31 October 2020
For those employees with fixed hours and pay, the reference period is the last pay period ending on or before 19 March 2020. For those with variable pay the calculation would be 80% of the higher of the wages earned in the corresponding calendar period in the tax year 2019 to 2020 or the average wages payable in the tax year 2019 to 2020.
An updated reference period is applicable to all other employees (i.e. those employees who were on the employer’s payroll after 19 March 2020 but before 30 October 2020).
This reference period (for those on fixed hours and pay) will be their last pay period ending on or before 30 October 2020. For employees with variable pay, the 80% is calculated on the basis of their average pay between the start date of their employment or 6 April 2020 (whichever is later) and the day before their furlough leave under the extended CJRS begins.
12. The calculation for “usual hours” is different for those employees who were not previously eligible under the CJRS.
13. Employers can start to make claims under the extended CJRS from 8am on 11 November 2020. All claims made in respect of November 2020 must be submitted by no later than 11.59 pm on 14 December 2020. Claims relating to each subsequent month should be submitted by 11.59pm on day 14 of the following month, unless it is a weekend, in which case claims should be submitted on the next working day.
30 November 2020 is the last day that employers may submit claims for periods ending on or before 31 October 2020.
14. There are new rules in relation to TUPE transfers. The guidance states that a new employer can make a claim under the extended CJRS for employees that have transferred to it pursuant to TUPE where those employees were employed by the old employer on or before 30 October 2020 and transferred from the old employer to their new employer on or before 1 September 2020. We understand from HMRC customer support on Twitter that this is an error in the drafting and it should read on or after 1 September 2020. However, this is still to be officially confirmed.
If you have any immediate questions about the information contained in this email, please do not hesitate to get in touch:
Employment Taxes Partner
T: 07810 852 362
Employment Taxes Senior Manager
T: 07392 870 199
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