June 2021 Extended Coronavirus Job Retention Scheme to 30th September 2021 – Update and Refresher
Background
On 3 March 2021, at the Spring Budget, the Chancellor confirmed that the Coronavirus Job Retention Scheme (CJRS) will run until 30 September 2021.
The current version of the scheme is the third iteration of the original CJRS that commenced in March 2020. This ‘extended’ scheme commenced on 1 November 2020, following the announcement of further lockdown measures for England at the time, and was originally intended to run until 31 December 2020. The latest extension to 30 September 2021 means the third version of the scheme will run for a total of 11 months.
Guidance
Full guidance on the scheme is available on GOV.UK on their Coronavirus Job Retention Scheme pages.
HMRC have also produced a step by step guide and a list of monthly claims deadlines. There are also live webinars, and more information on the business support finder on GOV.UK.
Outline of the scheme
The key features of the extended CJRS (version 3) are:
- Employees are entitled to 80% of the current salary for hours not worked up to a maximum cap of £2,500 per month throughout the lifetime of this scheme.
- Employees can be fully or flexibly furloughed – so they are permitted to work part time and be paid their usual salary for those hours, while receiving furlough pay at 80% for their unworked hours.
- Employees must agree to being fully or part furloughed before their new working arrangements start and the employer must confirm details of their new terms and conditions in writing.
- Employees who are required to shield, are clinically vulnerable or have childcare responsibilities can be furloughed.
- Employers can claim support from the Government for the cost of unworked hours, although the support will reduce from 1 July 2021 with employers asked to contribute to employees’ furlough pay during July to September.
- Employers must meet any associated costs of Employer’s National Insurance Contributions (NIC) and pension contributions from November 2020 to September 2021.
- Claims should start and end in the same month.
- Claims should run for a minimum period of 7 consecutive days unless they relate to a short period at the start or end of a month.
- Employers can claim up to 14 days in advance of making payments to staff but are encouraged to defer claiming until staff hours are finalised where possible, to avoid having to amend claims.
Employees should receive up 80% of their usual pay for the hours not worked throughout. There are special rules to determine what an individual’s usual pay is. (NB For periods from 1 May, changes were made affecting how average wages should be calculated when an employee has variable pay and has had periods of statutory leave. These changes are explained under the heading ‘Employees returning from family-related statutory leave’.)
March 2021 Update to Furlough Scheme
The CJRS has been extended until 30th September 2021 and the level of grant to employers will stay the same until 30th June 2021.
Changes to the level of grant from 1st July 2021 can be found here.
January 2021 Update to Furlough Scheme
The Coronavirus Job Retention Scheme has been extended until 30 April 2021.
Claims for furlough days in January 2021 must be made by 15 February 2021.
You can no longer submit claims for claim periods ending on or before 31 October 2020.
October 2020 Update to Furlough Scheme
On 31 October the CJRS was extended until December and the JSS that was due to commence on 1 November was postponed.
The new Job Support Scheme (JSS), which was the government’s replacement wage support scheme, had been set to launch on 1 November, with the government publishing 11 detailed guidance notes on the evening of 30 October to help employers in administering the same. This scheme has, however, now been postponed until the extended CJRS ends.
Below we summarise the key aspects of the extended CJRS and answer some of the key questions employers are likely to have.
Key points
- The CJRS will now remain open until December and will not close, as originally planned, on 31 October. The exact end date is currently unknown but it is perhaps likely to coincide with the proposed ending of the new lockdown in England on 2 December. The government has confirmed that there will be no gap in eligibility for support between the previously announced end-date of the CJRS and this extension.
- The introduction of the JSS (both the Open and Closed schemes) will be postponed until the CJRS ends.
- The level of grant under the extended CJRS will mirror levels available to employers under the original CJRS in August. This means that the government will pay up to 80 per cent of an employee’s normal pay up to a cap of £2,500 and employers will be responsible only for National Insurance Contributions and pension contributions. As with the original CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
- Given the previous scaling back of the CJRS (in October the government contribution was limited to 60 per cent of normal pay) and the acknowledged reduced level of support under both the JSS Open and Closed, the extended CJRS is significantly more generous to employers.
- Importantly, to access the extended scheme, neither the employer nor the employee needs to have previously used the CJRS. To be eligible, employees merely need to have been on an employer’s PAYE payroll before midnight on 30 October (with a Real Time Information (RTI) submission notifying payment for that employee to HMRC having been made on or before 30 October). This is a significant change to the original CJRS, where the vast majority of employees had to have been furloughed for a period of at least 3 consecutive weeks ending on or before 30 June to enjoy continued access to the scheme through July to the end of October.
- It is unclear whether the extended scheme will allow employers to rehire employees who have been made redundant and put them on furlough (as was the case in certain circumstances under the original CJRS). This will need to be clarified by the government in due course but given the requirement is that employees need to have been on an employer’s PAYE payroll before midnight on 30 October, this does theoretically mean that employees made redundant effective on 31 October (and the date the original CJRS was due to close) could be in scope under the extended scheme. However there are employment law implications to rehiring employees so employers considering this should give this careful thought.
- Flexible furloughing will continue to be an option in addition to full-time furloughing so employees will be able to work some of their hours (and be paid for this by their employer) and receive furlough pay for unworked hours. Calculations determining usual hours and worked hours will broadly follow the same methodology as under the original CJRS.
- The government expects that publicly funded organisations will not use the extended scheme, as was the case for the original CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements will continue to apply to these employers.
- The extended CJRS will operate as the original CJRS did, with businesses being paid upfront (as opposed to in arrears under the JSS) to cover wage costs. The government has noted, however, that there will be a short period where the legal terms of the extended scheme are changed and systems updated in which businesses will be paid in arrears.
- It is also unclear how the furlough extension will interact with the Job Retention bonus. Under the current rules of the Job Retention bonus scheme, the employee needs to be retained in employment and paid a minimum amount for November, December and January. It’s unclear if furlough pay will count towards the minimum (the government has confirmed that JSS pay counts so in principle it seems likely that furlough pay should also count) or if the government will now amend the bonus scheme.
Points for employers to consider
- Most businesses will have been planning workforce changes to dovetail with the original 31 October end date for the CJRS and the introduction of the JSS from 1 November. These plans will need to be revised given the extension of the CJRS and in most cases, urgent communications will be required with employees. The nature of this communication will vary depending on what plans and communications the employer had already put in place.
- Employers with staff still on furlough and/ or flexible furlough may simply want to extend these existing furlough arrangements through until December. Many existing furlough agreements will be drafted to come to an end either on the expiry of the CJRS or on 31 October. Given previous issues under the original CJRS as to how to obtain and document employee agreement to CJRS terms, it would be sensible to get relevant employees to return signed letters indicating their agreement to an extension (or an appropriate collective agreement with any recognised trade union) or, at least, to respond by email confirming their agreement to remain on furlough until December on existing furlough terms. This will be easier if the extension to furlough is on the same terms as up to 31 October.
- Employers who have topped up pay throughout any previous furlough arrangements may want to extend furlough arrangements but may need to scale back or remove the top up. In this instance, employee consent to any such changes may be required, depending on the wording of the furlough agreement – in which case employers should seek the employee’s consent to the change urgently.
- Some employers may have already put in place appropriate JSS (Open) temporary working agreements with their employees to commence on 1 November. In such cases, employers should now communicate with their employees about the extension of the CJRS (and that the JSS has been postponed) and, if appropriate, ask them to agree to be furloughed until December instead. Any such communication could confirm any flexible furlough arrangements that might be put in place (if there is some work you want the employees to perform) and point out that the arrangements will be more generous through November than they would have been under the JSS (subject to any top that you may have planned to offer under the JSS). As per the above, employers should seek, obtain and record employee agreement to this change (whether that be in writing, through collective agreement or by email).
- There may be other cases where employees have not been on furlough and are not signed up to a JSS temporary working agreement. This might be, for example, where an employee was precluded from being furloughed between July to October as they had not been furloughed for 3 consecutive weeks by the end of June. If you are now considering furloughing any such employees up until December, it will be important to enter into the more detailed furlough agreement that you have used for other furloughed employees.
Guidance
Claim for wages through the Coronavirus Job Retention Scheme
