As outlined in the government's press release the CJRS will remain open for a further five months until the end of March 2021.
Key resources
Press release
Factsheet
Policy Paper
Highlights from the government resources:
Outline of the extended CJRS -The CJRS will now run until the end of March 2021 with eligible employees receiving 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month up until January when the CJRS extension will be reviewed to examine whether economic circumstances are such that employers will be asked to increase contributions.
There are currently no employer contributions to wages for hours not worked. Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month.
Employer flexibility - Employers will have flexibility to use the scheme for employees for any amount of time and shift pattern, including furloughing them full-time. Flexible and full furlough are both still available for employers.
Payment under the CJRS - The extended CJRS will operate as a new scheme but will run as the previous scheme did unless the guidance says otherwise, with businesses being able to claim either shortly before, during or after running payroll. Claims can be made from 8am on Wednesday 11 November 2020.
Claims made for November must be submitted to HMRC by no-later than 14 December 2020.
Claims relating to each subsequent month should be submitted by day 14 of the following month, to ensure prompt claims following the end of the month which is the subject of the claim.
Employee eligibility - Neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS to make a claim under the extended CJRS (providing other eligibility criteria are met). This will be a welcome relief for many employers and represents a more flexible version of the CJRS.
An employer 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 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
Calculation of pay will be the same as the previous furlough arrangement but new guidance will be provided.
Employee Agreement – Employees must have in place an agreement with their employees in relation to the extended scheme and as before that agreement must be in writing and retained for 5 years. Records of hours worked and hours furloughed must be kept for 6 years. There is no requirement for written acceptance. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a CJRS claim.
Employees that are re-employed - Employees that were employed and on the payroll on 23 September 2020 (the day before the Job Support Scheme announcement) who were made redundant or stopped working afterwards can be re-employed and claimed for under the extended CJRS. The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees. The extension to "or stopped working" represents even more generous support.
Naming employers which claim under the CJRS - HMRC will publish details of employers who make claims from December onwards under the extended scheme. Full details of this will be within the detailed guidance to be published next week.
United Kingdom - The extension of the CJRS applies to all parts of the United Kingdom.
The Job Retention Bonus (JRB) – The JRB will not be paid in February but instead the government will redeploy a retention incentive at the right time. The policy intent of encouraging employers to keep people in work until the end of January has fallen away given the extension of furlough. Employers who have factored this into budgets need to urgently review this.
The Job Support Scheme (JSS) - The JSS is postponed indefinitely.
Conclusion
The extension of the CJRS will provide employers with much needed support and a degree of certainty over the winter months. The Chancellor provided an explanation for the ever changing government support offered: "I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK - and that has meant adapting our support as the path of the virus has changed".
As before, now is the time for crucial business planning, including auditing the workforce to determine who needs to be furloughed. Employers will need to ensure the correct records and furlough agreements are in place, providing vital evidence to HMRC of the genuine nature of claims made and providing maximum flexibility with regard to the furlough arrangement to ensure the employer can focus on business continuity.
Further guidance on the mechanics of the extended CJRS is expected on 10 November 2020. We will keep you updated.
