Literally hours before the furlough (Coronavirus Job Retention) Scheme was due to end at midnight on 31 October, with the Job Support Scheme taking over on 1 November, the Prime Mister announced that it would be extending the scheme until 2 December.
This follows as a result of the announced second national lockdown in England.
As a result, the Job Support Scheme will not launch as intended on 1 November 2020. We will have to see whether or not it is actually launches in May 2021.
Recent announcements
On 5 November, the Chancellor, Rishi Sunak, confirmed that he would extend the furlough scheme across the UK until 31 March 2021, though this has now been extended to 30 April 2021.
On 17 December, Rishi Sunak confirmed that the furlough scheme would be extended for an additional month to 30 April 2021. The government will continue to contribute the 80% towards wages to 30 April 2021 for the hours not worked by employee 'to give businesses and employees across the UK certainty into the New Year' and 'ahead of the 45 day redundancy notice period'. Employers must still pay wages, NICS and pensions for hours worked and NICS and pensions for hours not worked. Eligibility criteria will remain the same.
Main issues to be aware of
Most of the details regarding the extension of the furlough scheme, from 1 November 2020, remain the same.
There is continued flexibility compared to the original furlough scheme from March to June 2020. Flexible furlough is continuing to be popular with employers.
National Insurance and employers’ pension can still not be reclaimed on furloughed pay.
Employees serving notice
Up to 31 October 2020, there were no restrictions on employers paying and reclaiming furlough under the scheme. However, from 1 November 2020, under version 3 of the scheme, employers are prohibited from use the scheme to finance the wages and salaries of furloughed employees who are serving a notice period.
Holidays
Employees continue to be entitled to holiday pay, for their accrued annual leave, whilst furloughed. Where an employee does not take their holiday leave, whilst off furlough and whilst being paid their normal full salary, they should be paid in full for this ‘holiday’ time even if they are still at home on furlough and receiving 80% for furlough pay.
Sickness
Employers must continue to decide whether to keep employees on furloughed or class them as on sick leave when paying their employees any potential Statutory Sick Pay (SSP), if they qualify.
Generally speaking, employees would receive more take home pay if they are on furlough, when they would receive 80% of normal pay, than if they receive SSP, where the latter is only paid at the rate of £95.85 per week for up to 28 weeks. Coronavirus related SSP is paid at the same rate, but only for a maximum of two weeks, and there are no waiting days. Employers cannot reclaim normal SSP, but they can reclaim coronavirus related SSP.
Overview history
The Coronavirus Job Retention Scheme subsidised 80% of the gross pay of employees who could not work, either because their workplace was closed by their employer / by law or because their employer could not provide sufficient work for them to cover their normal hours.
Over recent months, employees have continued to receive 80% of wages and salaries for the hours they could not work. However, employers could only reclaim 70% of furlough pay in September and 60% of furlough pay in October from the government. From 1 August 2020 employers were also unable to reclaim the National Insurance and employer’s pension contributions due on gross furlough related wages and salaries.
From 1 July, employers were been able to bring back employees part-time, under the flexible furlough scheme, and furlough employees for the remaining time. Flexible furlough will be permitted alongside full-time furlough under the newly extended Coronavirus Job Retention Scheme. Therefore, employees may be furloughed for a few days or hours per week. There appears to be no minimum time set for furloughed hours or working hours.
Job Support Scheme
The Job Support Scheme (JSS) was to take over from the Coronavirus Job Retention Scheme on 1 November. The JSS scheme was not too attractive to employers as staff had to work at least 33% of normal hours to be eligible and employers has to pay 33% of non-working hours. This was very recently updated to workings at least 20% of normal hours with employers only having to contribute 5% of non-working hours.
The JSS is now on hold, supposedly until April 2021.
Coronavirus Job Retention Scheme extended
As a result of the announcements, employees will continue to receive 80% of their pay up to 31 March 2021, up to a maximum cap of £2,500 pm, for the hours that they do not work. However, the scheme will become more attractive to employers. The government will repay the 80% paid to employees. Employers will only be asked to pay the employers’ national insurance and pension contributions for furloughed hours. This is the same recovery level as applied for employers up to 31 July.
On 5 November, the Chancellor announced that 'we will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more,' e.g. by reducing their reclaim from 80%, like from 1 September when the recovery percentage was steadily reduced to 70% and then 60% in October 2020.
To be eligible under the extended Coronavirus Job Retention Scheme, employees had to have been included on an RTI payroll submission by their employer before 31 October 2020, though employees did not have to have been furloughed before that date. This will therefore open up the extended furlough scheme to recently employed persons who were not eligible after the February/March 2020 start date of the original scheme.
Employees on any type of contract can qualify, including zero hours. Employers will be able to agree working arrangements with employees.
Eligibility
This is an extension of the existing scheme. It is not a new scheme.
There is no gap between the previously announced end date, of 31 October, for the CJRS and this extension.
Employers can claim for employees who were on their PAYE payroll on 30 October 2020.
Employers must have made an RTI submission to HMRC between 20 March 2020 and 30 October 2020 notifying a payment of earnings for that employee.
If employees were on the payroll on 23 September 2020, i.e. employers notified HMRC on an RTI submission between 20 March 2020 and 23 September 2020, and were made redundant or stopped working for the employer, they will also qualify for the scheme, if the employer re-employ them.
Neither the employer nor an employee needs to have previously used the scheme.
Claims made for November must be submitted to HMRC by no later than 14 December 2020.
Claims for future months must be submitted within 14 calendar days after the month they relate to, unless this falls on a weekend in which case the deadline is the next weekday.
The last day that you can submit claims for periods ending on or before 31 October 2020 is 30 November 2020. After this date you will not be able to submit or amend any further claims for periods ending on or before 31 October 2020.
For claims relating to periods after 1 November 2020, you will only be able to increase the amount of your claim if you amend the claim within 28 calendar days after the month the claim relates to, unless this falls on a weekend and then it is the next working day.
Full guidance on the CJRS extension was published on 10 November 2020.
HMRC stated that claims could be made from Wednesday 11 November 2020.
It now seems that furloughed staff who are serving a redundancy notice period, unlike the earlier versions of the scheme, will not be eligible to use the scheme to fund their wages and salaries during the notice period even if they were currently on furlough.
While this has yet to be confirmed, it would be consistent with government’s previous plans, under the Job Support Scheme before it was indefinitely postponed.
Reference pay
For an employee eligible for the original version of the scheme, their reference pay for calculations is based on their pay in 2019/20, and which was reported on a full payment submission (FPS) up to 19 March 2020. In other words, any salary increase after 19 March 2020 will be ignored when calculating their furlough pay from 1 November 2020. This is the case even if the employer did not make a claim for the employee.
Other employees may now be eligible for the extended scheme, e.g. if they had pay for 2020/21 reported on an FPS between 6 April 2020 and 30 October 2020. If an employee was not previously eligible for CJRS, their 80% of furlough pay will be calculated based on their last pay period ending on or before 30 October 2020 (if they have a fixed salary) or, if their pay varies, based on 80% of their average pay between the start date of their employment or 6 April 2020, whichever is later, and 30 October 2020.
It could be argued that it is not fair for employees, who are now eligible for the extended furlough scheme, who have recently started with a business, to have their furlough pay based on their current salary whereas an employees on the payroll in March 2020, even if not furloughed before now, will have their furlough pay based on their pay in March 2020 (or average pay to March 2020 if they are on various hours).
This can be demonstrated with an employee on a fixed wage rate, who began work in October 2020, on the current national minimum wage of £8.72 per hour, receiving furlough pay at a higher rate compared to their colleague who had been employed at February 2020 who would only receive their furloughed based on £8.21 per hour.
See the HMRC website to calculate how much can be claimed using the scheme.
Claiming
When making a claim under the extended scheme, employers will have to report the hours worked and the usual hours worked. For the worked hours, employers will have to pay employees under the terms of their employment contract.
Until HMRC and their IT contractors can once again update their systems, employers will be required pay their staff and then reclaim wages and salaries from HMRC. Once updated, employers will once again be able to claim upfront for the furlough pay before having to pay their staff.
The HMRC portal opened for claims on 11 November. Claims for this month must be made by 14 December. Future claims must be made by the 14th of the following month.
Following the lockdown in England, the extended furlough scheme was due to end on 2 December. With the extension of the furlough scheme to 31 March 2021, the two Job Support Schemes, the Open and the Closed versions, could then start on 1 April rather than on 1 November. The English three tier system should then come back into force depending on the Coronavirus risk level of each area.
The government has adjusted its position on claiming the grants during an employee’s notice period. This now means that if you dismiss a furloughed employee or make them redundant then you may not be able to make a claim.
From February 2021, HMRC will publish business names, with an indication of the value of claims, of employers who make Coronavirus Job Retention Scheme (CJRS) claims that cover periods from December onwards.
You can see more on how HMRC indicate the value of these claims in banded ranges on
After lockdown
Under the JSS Closed scheme, if a business is still forced to remain closed after 2 December, due to local Coronavirus restrictions, employees will be paid 67% of their wages and salaries and employers can reclaim this from HMRC. Employers under the JSS Closed scheme will not have to contribute towards employees’ pay.
It is expected that the JSS Open scheme would then be able to employees and employers allowing affected employers to bring back their employers part time. So long as employees then work at least 20% of their normal hours they should then be eligible for 67% of pay for the hours not worked.
Job Retention Bonus
On 5 November, the Chancellor announced that employers would now not be entitled to the previously announced £1,000 Job Retention Bonus for every furloughed employee retained in employment until at least 31 January 2021. This is because the furlough scheme has been extended. It was announced that 'we will redeploy a retention incentive at the appropriate time.'