As outlined in the government's news story the CJRS will remain open from 31 October 2020 until December providing much needed economic support.
Highlights from the news story:
The extended CJRS – The extended CJRS is more generous than it was in October when employers had to contribute 20% of wages. The level of the grant mirrors the levels available under the CJRS in August. The government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions and pension contributions only for the hours the employee does not work. The grant must be paid to the employee in full. Employers will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time, and will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs.
Employers should continue to pay the employee for hours worked in the normal way. Employers are still able to top up employees' wages above the grant at their own expense should they choose.
Employers will be paid upfront to cover wage costs under the extended CJRS, as they were under the previous CJRS. There will be a short period when the government needs to change the legal terms of the scheme and update the system and employers will be paid in arrears for that period.
Eligible employers - All employers with a UK bank account and UK PAYE schemes can claim the grant. Another positive development is that neither the employer nor the employee needs to have previously used the CJRS. This will be a welcome relief for many employers and represents a more flexible version of the CJRS.
The government expects that publicly funded organisations will not use the scheme, as has already been the case for CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted.
Eligible employees - Employees must be on an employer's PAYE payroll by 23.59 on 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.
In accordance with the current CJRS rules:
- Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.
- Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period.
- When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
- Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
- Employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts, for worked hours.
The Job Support Scheme - The Job Support Scheme which was scheduled to come in on 1 November 2020 has been postponed until the CJRS ends.
Making a claim - The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.
Guidance - Additional guidance will be set out shortly. This will include details on how to claim this extended support through an updated claims service.
The extension of the CJRS will provide employers with much needed support as England enters a four week lockdown, although it will apply nationally. The Chancellor, Rishi Sunak, has consistently stated that we need to evolve and adapt and with regard to the new support he said "As restrictions get tougher, we are taking steps to provide further financial support to protect jobs and businesses. These changes will provide a vital safety net for people across the UK".
Now is the time for immediate business planning, auditing the workforce to determine who needs to be furloughed during November. As always, it will be important to have the correct records in place to provide the written evidence to HMRC of the genuine nature of the claims. Furloughing an employee represents a significant change to terms and conditions. A fair and transparent process should be followed and a furlough agreement should be put in place capturing the new arrangement. Where furlough agreements were already in place, they should be reviewed and clearly extended as many will have been brought to a close due to the expected closure on the 31 October 2020.
If you require any assistance with the issues raised in this update please do not hesitate to contact our UK based employment experts.