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A guide to the extended furlough scheme

The Coronavirus Job Retention Scheme (CJRS) was due to close on 31 October 2020 and replaced by the Job Support Scheme (JSS). However, in light of the government’s announcement on 31 October 2020 to introduce enhanced restrictions in England to deal with an increase in infections and hospitalisations, they also decided to extend the CJRS until December.

 To help employers, I’ve set out below what we know so far, as of 3 November 2020.

The main changes

What do employers need to contribute financially to the CJRS?

For claims from 1 November, employer contribution rates will be the same as they were in August, namely that employers just need to pay employer NICs and pension contributions.

The amount received by the employee will not change at all for the duration of the scheme, remaining at 80% of their salary up to a maximum of £2,500 per month.

Can I still top up pay to 100%?

Yes, that is still permitted. You can top up pay to 100% levels if you wish.

Is the scheme still open to new entrants?

For claims from 1 November to be eligible, employees must have been on an employer’s PAYE payroll by 23:59 on 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.

There is no requirement to have been furloughed previously for claims from 1 November.

Is the minimum furlough claim period changing?

We believe that the minimum claim period will still be seven consecutive calendar days.

Can you place employees on full and flexible furlough under the amended scheme?

Yes – the extension covers both full and flexible furlough.

What is flexible furlough?

As under the previous scheme, you can bring employees back to work for any amount of time and on any shift pattern whilst still being able to claim the CJRS grant for the hours not worked. You will need to pay for any hours the employee does work.

Are the claim periods changing?

Further guidance is awaited as it is not clear yet whether there will be any changes to the claim period.

When will the CJRS end?

The Treasury statement says the CJRS will end in December – we do not have a firm date at the time of writing but envisage it will tie in with the currently proposed end of the enhanced nationwide (England) restrictions.

Who can claim?

Any company with a UK bank account and UK PAYE scheme is eligible to apply to use the extended CJRS. There is no requirement for the employer to have utilised the furlough scheme previously.

The Treasury statement simply says that employees must be on an employer’s PAYE payroll by 23:59 on 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020. We await further guidance on whether there are any other requirements.

What if you receive public funding?

As with the previous scheme, publicly-funded organisations are expected not to use the scheme.

Organisations can use the scheme if they are not fully funded by public grants and they should contact their sponsor department or respective administration for further guidance.

Minimum furlough periods

It is understood that there is no minimum period of furlough under the extended scheme. However, the minimum claim period you can apply for under the CJRS is seven consecutive calendar days.

Length of the claim period

As mentioned above, the minimum claim period appears to be seven consecutive calendar days. Further information is awaited.

What about claiming for flexibly furloughed employees?

We await further details regarding any requirements in this regard. They may accord with previous rules, but until we get updated guidance, we won’t know for sure.

Agreement to furlough

If you furlough employees, whether full or flexible, you will need to agree this with the employee (or reach collective agreement with a trade union).

We still await details of what the agreement will entail. However, we believe the requirements will be the same as previously, namely:

  •       Make sure the agreement is consistent with employment, equality and discrimination laws.
  •       Keep a written record of the agreement for five years. There are template letters to use on Ellis Whittam’s free Coronavirus Advice Hub. Note, though, that we await full guidance from HMRC, so these are subject to change.
  •       Keep records of how many hours your employees work and the number of hours they are furloughed and not working.

It is up to you whether you want to flexibly furlough any of your employees and, as stated, you can continue to “fully” furlough employees if you wish but note that the previous rules banning those employees from undertaking any work for you during the time they are on furlough are likely to still apply.

Extended furlough claims process

We await further details on the claim process, but it is likely to be similar to the previous scheme where the process can be broken down into four steps:

  1. Working out the employee’s usual working hours
  2. Calculating the number of furloughed and working hours in a pay period
  3. Calculating how much you can claim using the online calculator
  4. Making your claim via the HMRC portal

Please continue to regularly review the government’s site for updates in this regard.

Step 1) Work out the employee’s usual hours

If the employee is furloughed, whether flexible or full, you will probably need to work out their usual hours and record the actual hours they work as well as their furloughed hours for each claim period. It is understood that the formula will be broadly the same as that under the previous scheme and will depend on whether the employee has fixed or variable hours. Once we have further details, we will update this guidance with the formula.

Step 2) Calculate the number of furloughed hours for each employee

Once you know what an employee’s usual working hours are in a pay period, Step 2 should be relatively simple. You will have already agreed with your employees how many hours they will work under the extended furlough scheme and will have kept records of the same.

To calculate the number of furloughed hours, start with your employee’s usual working hours total and subtract from that the hours they worked in the claim period.

Again, we await further details in this regard and will update this guidance once we have that.

Step 3) Calculating the amount you can claim

Once you know how many furlough hours you are claiming for in the pay period, you can calculate the value of that claim. We await further details on how this will be calculated, although it is expected that the calculations will be broadly similar to those under the previous CJRS.

Step 4) Making your claim

Details are awaited on how to claim under the scheme. Again, it is likely to be a similar process to that under the previous scheme.

Please note that the government and HMRC guidance on the scheme is being updated and expanded on a regular basis. The information here is correct at the time of writing (3 November 2020). No doubt further updates will be released in the forthcoming weeks and latest guidance will be updated on Ellis Whittam’s Coronavirus Advice Hub. We expect an updated Treasury Direction in due course, which could be problematic as that has statutory force but will be arrived AFTER the guidance has been issued.

Please note that as further detail emerges, some of the advice provided may change in line with further guidance from the government and may vary from the above. As a result, please ensure that you check the government’s website for the latest guidance on the CJRS. 

By James Tamm, director of legal services at employment law and HR support firm Ellis Whittam

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