Coronavirus Job Retention (Furlough) Scheme Extended

Boris Johnston announced earlier this evening that England is to be put back into lockdown for a month from Thursday 5 November 2020.  He also advised that the Furlough Scheme, otherwise known as the Coronavirus Job Retention Scheme (CJRS), that was due to come to an end today is to be extended until December.  This extension applies UK wide and not just to England. 

The Job Support Scheme (JSS) that was to open on 1 November 2020 to replace the CJRS is therefore now to be postponed until the extended CJRS ends.

The cost for employers of retaining workers will be reduced compared to the current CJRS, which ends today. This means the extended CJRS scheme is more generous for employers than it was in October.

Employers small or large, charitable or non-profit, are eligible for the extended CJRS.

Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time and will only be asked to cover National Insurance and employer pension contributions which, for the average claim, will account for just 5% of total employment costs.

This extended CJRS will operate as the previous scheme did, with businesses being paid upfront to cover wages costs. There will be a short period when the UK government needs to change the legal terms of the scheme and update the system.  Businesses will be paid in arrears for that period.

The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work.

As under the current CJRS, flexible furloughing will be allowed in addition to full-time furloughing.

Who is eligible? 

Employers 

All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.

The government expects that publicly funded organisations will not use the scheme, as has already been the case for CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers. 

Employees 

To be eligible to be claimed for under this extension, 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.

As under the current CJRS rules:

Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.

Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.

When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.

Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.

For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

What support is being provided and employer costs: 

For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.

Employers will pay employer NICs and pension contributions and should continue to pay the employee for hours worked in the normal way.

As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.

The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

Additional guidance will be published shortly by the UK Government and we will provide information on this as soon as it is available.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

Photo by Andrew Seaman on Unsplash