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Comment & Opinion

The Extended Furlough Scheme Guidance – What you need to know

 

The Government has now published guidance on the extension to the Coronavirus Job Retention Scheme (CJRS) – i.e. the furlough scheme – which was announced by the Chancellor of the Exchequer, Rishi Sunak, last week.

If you missed our initial article on the extension of the CJRS following Mr Sunak’s announcement, you can find it here.

To re-cap the main points:

  • The CJRS has been extended until 31 March 2021
  • Until 31 January 2021, for hours not worked by employees, the Government will pay up to 80% of employees usual salary, up to a maximum of £2,500 per month and employers will pay the employer national insurance and pension contributions
  • A review of the extended CJRS is planned for January and the level of employer contributions may be increased at that stage

The Government has published numerous pieces of updated guidance in the last 24 hours. For the purposes of this article, we will focus on the following: Check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme, Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme’, and Calculate how much you can claim using the Coronavirus Job Retention Scheme’.

Which employees can be claimed for

  • Employees who were employed on 30 October 2020, as long as a PAYE RTI submission was made between 20 March 2020 and 30 October 2020, notifying HMRC of the earnings.
  • Employees who were made redundant or stopped working on or after 23 September 2020 if those employees were rehired. However, for these individuals, a RTI submission must have been made between 20 March 2020 to 23 September 2020, notifying HMRC of the earnings.
  • There is no maximum number of employees that employers can claim for from 1 November 2020 and employers can furlough employees that have not previously been furloughed. This is in contrast to the rules which were in place from 1 July (in respect of the furlough scheme for claim periods which ended on 31 October 2020), where employers could only claim for those employees that they had previously claimed for.
  • The ‘reference periods’ to work out employees’ usual wages now differs depending on whether the relevant employee has previously been claimed for –
    • For employees on payroll on 19 March 2020 (where a RTI full payment submission was made to HMRC on or before 19 March) or for employees where a valid CJRS claim was made in a claim period on or before 31 October 2020, the reference period is the last pay period ending on or before 19 March 2020.
    • For all other employees, the reference period is the last pay period ending on or before 30 October 2020 (this will only apply for period starting after 1 November 2020) .

The Government has provided examples of how to calculate employees’ wages and the amount employers can claim for flexibly furloughed employees here.

Written agreements to furlough

  • Employers must confirm in writing to the employee that they have been furloughed and keep a written record for five years.
  • Employers can retrospectively furlough employees with effect from 1 November 2020 when the extended furlough scheme began. However, the retrospective agreements must be entered into on or before 13 November 2020.

Making redundancies and claiming for notice periods

  • If employees are to be made redundant, employers should continue to follow a fair process and consult with employees as necessary.
  • Employers can, for now, continue to claim for furloughed employees who are serving a statutory notice period.
  • However, the Government is currently reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will likely change the approach for claim periods starting on or after 1 December 2020. Further guidance on this is expected late November.
  • Grants claimed cannot be used to substitute redundancy payments.
  • Statutory redundancy payments and statutory notice pay should be based on employee’s normal wages rather than the reduced furlough wage.

Public knowledge of furlough claims

  • From December 2020, HMRC will begin publishing employer names and company registration numbers of companies and Limited Liability Partnerships, that have made claims under the scheme for the month of December onwards.

Dates for the diary

  • Employers can begin submitting claims under the extended furlough scheme on 11 November 2020 for periods from 1 November 2020.
  • If employers decide to retrospectively place employees on furlough from 1 November 2020, a retrospective agreement must be in place on or before 13 November 2020.
  • The deadline for claims in respect of claim periods to 31 October 2020 is 30 November 2020.
  • Changes to rules relating to claiming for notice periods to start from 1 December 2020.

If you would like any advice or assistance please contact the employment team, details below.

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Andrew
Rayment

Partner

Head of Employment & Immigration

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Charlotte
Smith

Partner

Employment & Sport

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Kendel
Shepherd

Senior Associate

Employment & Immigration

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