COVID- 19: Updated Furlough Guidance

The Coronavirus Job Retention Scheme (CJRS) is being extended until 31 March 2021.

The government has now issued full guidance regarding the extended scheme. The key points are as follows:

• There is no change to the calculation for employees that qualified for the scheme prior to 31 October 2020.

• The scheme is now open to all employers, even if they have not previously used the scheme. The calculation for new entrants into the scheme is slightly different from employees who have previously been furloughed.

• The reference salary and hours for employees who qualified under the previous scheme, but who were not previously furloughed, is calculated based on the rules applying prior to 31 October 2020. They are not treated as new entrants under the extended scheme.

• There is no limit to the number of employees who may be furloughed from 1 November 2020.

• Employees can be fully furloughed or flexibly furloughed (i.e. work reduced hours).

• To qualify under the extended scheme, employees need to have been employed by the business on 30 October 2020 and named on an RTI submission to HMRC between 20 March 2020 and 30 October 2020.

• Any employee who stopped working or was made redundant by 23 September 2020 can be re-employed and placed on furlough at the discretion of the employer. However, for claim periods starting on or after 1 December 2020, an employer cannot claim for any days on or after 1 December 2020 during which the employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation). For periods pre 1 December 2020 it provides that claims may be made if the employee is serving statutory notice only. The guidance is silent on contractual notice.

• Employers can claim for 80% of the employee’s unworked hours (subject to a monthly cap of £2,500). Employers will continue to pay for any hours worked by the employee in addition to Employer’s National Insurance and pension contributions. It is estimated that the National Insurance and pension contributions work out at approximately 5% of employment costs.

• Some employees on maternity leave may wish to end this early in order to be furloughed. However, they firstly must give 8 weeks’ notice of their return and therefore cannot be placed on furlough immediately.

• The extended scheme will be reviewed in January when it is possible that employers will be asked to make additional contributions towards their employees’ wages.

• Claims now must be made within 14 days of the end of each month. The claim for November 2020 must therefore be made by 14 December 2020.

• The claims can be backdated to 1 November 2020, but only on the basis that a written furlough agreement has been established with the employee by Friday 13 November 2020. It is essential that the necessary paperwork is in place. An example of a typical agreement can be found on earlier blog:-

https://jsca.co.uk/flexible-furlough/

The CJRS rules are complex, but we have helped our clients to claim over £3m of furlough grants since the scheme was introduced in March 2020. If you require assistance with your payroll or furlough claims please get in touch.

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 Raj Rana on Unsplash