How will it work?
For claim periods between November 2020 and April 2021, employees will receive 80% of their usual salary for any unworked hours. The maximum grant per employee per month is £2,500 (Equivalent to full earnings of £3,125 per month), and this cap is proportional to the hours not worked.
The employer will not need to make any contribution to the employees unworked wages – the full 80% is covered by the grant. The employer can “top up” an employee to any amount if they wish.The grant does not cover any Class 1 Employers National Insurance or Employers Pension Contributions due, so employers are still liable for these costs.
Which employees qualify?
As per the previous announcement of the CJRS extension, employers can claim for employees who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
Employers will have flexibility to use the scheme for employees for any amount of time or shift pattern, furloughing employees on either a full-time or part-time basis, and will be able to vary the hours worked in agreement with the employee.
As under the current CJRS rules, employees can be on any type of employment contract.
An employee does not have to have been furloughed under the CJRS previously for qualify.
How are 'usual hours' and 'reference salary' calculated?
For employees who have been previously furloughed, these calculations have not changed. For those who have not previously been furloughed:
Reference salary -
- Fixed salary - 80% of the wages payable in the last pay period ending on or before 30 October 2020
- Varied wages - 80% of the average payable between (these dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins
Usual hours –
- Fixed hours - Usual hours for an employee who is contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work, will be the contracted hours worked in the last pay period ending on or before 30 October 2020.
Varied hours - the usual hours will be the average hours worked between (these dates are inclusive):
- the start date of the 2020 to 2021 tax year, (for example, 6 April 2020)
- the day before their CJRS extension furlough periods begins
How do the claims work, when can I make a claim and what are the deadlines?
As has been the case since July, claims can only be made on a calendar month basis and cannot overlap each other. For example, if your pay period runs between 6th November and 5th December and you wish to make a CJRS claim in relation to this whole period, it will need to be calculated and claimed in two parts – one for the 6th – 30th November, and one for 1st – 5th December.
Employers will be able to claim from 8am on Wednesday 11 November 2020. Claims can be made:
- in respect of an employee for a minimum 7-day claim window
- in advance
- in arrears for the period from 1 November 2020 to 11 November 2020, from the week commencing 9 November 2020
Claims relating to November 2020 will need to be made before 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month.
The deadline for claims up to 30th October 2020 remains 30 November 2020.
What about the Job Retention Bonus?
The Job Retention Bonus (JRB) will not be paid in February 2021 – the scheme has now been deferred until a later, yet to be accounted date. The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the CJRS is now being extended to 31 March 2021, the policy intent of the JRB no longer applies.
Is there anything else I need to know?
Most of the
principles of the original Furlough Scheme remain the same unless otherwise
specified. The basic calculations mirror those that were seen in the scheme in August.
Furlough agreements with employees should still be given consideration. Employers must keep a written record of the agreement for 5 years, although the employee does not have to provide a written response. There is no minimum furlough period – an employee can be flexibly furloughed for any number of hours, or indeed fully furloughed. A claim period must last at least 7 days, unless the claim is at the start of the month and directly consecutive from the prior month (as in the example above showing 5 day claim period of 1st – 5th December).
It is essential to ensure that your furlough
calculations are accurate. Flexible furlough calculations are not straight
forward, and you need to ensure you have used the correct reference salary and
usual hours figure. HMRC have already begun the process of investigating claims
and sending letters to employers who they think may have overclaimed.