Extended Job Retention Scheme: the key points

On 3 March 2021, the Government announced a further extension of the Coronavirus Job Retention Scheme (CJRS, or furlough scheme). The scheme, which was due to end on 31 March 2021, has been extended until 30 September 2021.

Employers will remain able to claim 80% of employees’ wages, capped at £2,500 per month for hours not worked (with the cap reduced in proportion to the hours not worked) until the end of June 2021. Employers will be asked to contribute to the cost of the wages from 1 July 2021. Employers must continue to pay the national insurance and employer pension contributions on employees’ furlough pay.

The Government guidance has been updated to include the extension. In addition to the updated guidance, a sixth Treasury Direction covers the CJRS from 1 February 2021 to 30 April 2021. The previous Treasury Direction sets out how the CJRS operated until 31 January 2021.

This note specifically relates to claims for periods that start on or after 1 November 2020. For claims for periods ending on or before 31 October 2020, see our previous post here.

Extension to the CJRS: eligibility

Who can claim?

All employers with a UK bank account and created and started UK PAYE scheme on or before 30 October 2020 (or on or before 2 March for periods starting on or after 1 May 2021) can claim the grant. The employer does not need to have previously claimed under the scheme.

Further detail is set out in the following guidance:

Which employees are eligible?

For periods ending on or before 30 April 2021 employers can claim for employees who were employed on 30 October, as long as they have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. Employers do not need to have previously claimed for an employee before 30 October 2020 to claim.

For periods starting on or after 1 May 2021, employers can claim for employees who were employed on 2 March 2021 as long as they have made a PAYE RTI submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. Employers do not need to have previously claimed for an employee before 2 March 2021 to claim for periods on or after 1 May 2021.

Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts.

If employees were made redundant or stopped working for the employer on or after 23 September 2020, subject to conditions set out in the guidance, the employer can re-employ them and put them on furlough. However, there is no obligation to do so and employers should consider carefully the employment law implications and, if necessary, seek advice if considering this option.

Unlike the provisions that were in place up to 31 October 2020, for claims from 1 November there is no maximum number of employees that an employer can claim for.

Further detail is set out in the following guidance:

Can employees who are unable to work due to health issues be furloughed?

Yes, in certain circumstances. If an employee is unable to work because they are clinically extremely vulnerable or at the highest risk of severe illness from coronavirus and following public health guidance, an employer can chose to furlough them. The guidance states that it is up to employers to decide whether to furlough those employees. It goes on to state that “an employer does not need to be facing a wider reduction in demand or be closed to be eligible to claim for these employees.” However, it is not clear that this is in line with the exceptional purpose of the CJRS as set out in the Treasury Direction, which refers to claims for employees by employers “whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.”

Can employees who are self-isolating or on sick leave be furloughed?

The guidance states that the scheme is not intended for short-term absences from work due to sickness. Employees who are on sick leave or self-isolating may be eligible for Statutory Sick Pay (SSP).

Short term illness/self-isolation should not be a consideration in deciding whether to furlough an employee. If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees. In these cases, the employee should no longer receive sick pay and would be classified as a furloughed employee.

An employer can claim from both the CJRS and the SSP rebate scheme for the same employee, but not for the same period of time. When an employee is on furlough, the employer can only reclaim expenditure through the CJRS, and not the SSP rebate scheme. Employers may be able to reclaim under the SSP rebate scheme for non-furloughed employees.

If an employee becomes sick while furloughed, it is up to employers to decide whether to move those employees onto SSP or keep them on furlough, at their furlough rate of pay. If the employee is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although they may qualify under the SSP rebate scheme.

Further guidance on reclaiming SSP can be found here:

Check if you can claim back Statutory Sick Pay paid to employees due to coronavirus (COVID-19)

Can employees who are unable to work due to caring responsibilities be furloughed?

Yes. The guidance states that employees who are unable to work (including from home) due to caring responsibilities because of coronavirus, such as caring for children at home because of closed schools and childcare facilities or caring for a vulnerable person in the household can be furloughed.

Extension to the CJRS: furlough agreement

Does the employee have to agree to be furloughed?

Yes. The guidance reminds employers that they should discuss with their staff and make any changes to the employment contract by agreement.

The employer must confirm to the employee (or reach collective agreement with a trade union) in writing that they have been furloughed. The written record must be kept for five years. The employer must also keep records of how many hours the employees work and the number of hours they are furloughed for six years.

The employee does not have to sign the agreement under the terms of the scheme. However, our view is that the employer should seek the employee’s signed agreement to the furlough arrangement, as this can be evidence of valid consent.

Employers were able to make a furlough agreement retrospectively from 1 November but only where it was put in place up to and including the 13 November 2020.

Are there any restrictions on the furlough period or pattern?

No. Employers can furlough employees for any amount of time and any work pattern. Employees can be fully or flexibly furloughed. Employees can enter into a flexible furlough agreement more than once.

However, employees cannot do any work for the employer during hours that they are recorded as being on furlough.

Does the employer have to furlough all employees?

No. However, decisions about who to offer furlough to must not be discriminatory.

Can an employee work while they are on furlough?

They can work for another employer, if contractually allowed. However, during hours that they are recorded as being on furlough employees cannot do any work for their employer that makes money for the employer or any linked or associated organisation; or provide services for the employer or any linked or associated organisation.

Employees can carry out volunteer work while they are on furlough as long as it is for another employer or organisation.

Employees can take part in training while they are on furlough as long as this does not provide services to or generate revenue for their employer or a linked or associated organisation. The guidance states that employees should be encouraged to undertake training. Employees are entitled to be paid at least National Minimum Wage for time spent training on furlough.

Can an employee take holiday while they are on furlough?

Yes. Holiday continues to accrue while an employee is on furlough. The employee and employer can agree to vary holiday entitlement, but the employee must not be entitled to less than 5.6 weeks paid holiday per year.

If the employee takes holiday whilst on flexible furlough, the holiday is counted as furloughed hours rather than working hours.

However, the updated guidance reminds employers that they can only place employees on furlough if coronavirus is affecting their operations. Employees should not be placed on furlough just because they are on holiday for that period.

Employees will be entitled to holiday pay calculated in accordance with normal principles. This means that employers will need to top up the employee’s pay for the holiday period (assuming that the employee has agreed to reduced pay during furlough) and will not be able to reclaim that additional amount from the scheme.

Extension to the CJRS: the grant

How much can employers claim?

Employers continue to pay employees in full for the hours they work in the usual way.

For periods ending on or before 30 June 2021, employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month (£576.92 per week).

From 1 July 2021, the level of grant will be reduced. Employers will be asked to contribute towards the cost of the furloughed employees’ wages.

The employer contribution to wages for hours not worked will be 10% (up to £312.50) in July and 20% (up to £625) in August and September 2021.
The Government contribution to wages for hours not worked will be 70% (up to £2,187.50) in July and 60% (up to £1,875) in August and September 2021.
The employee must continue to receive 80% of pay for hours not worked (up to £2,500 per month) until the end of September 2021.

The monthly cap is reduced in proportion to hours worked. Employers can choose to top up employees’ pay for the hours not worked, but do not have to.

In order to calculate their claim, employers will need to work out the length of their claim period, what to include when calculating wages, and the employee’s usual hours and furloughed hours. The claim period must be a minimum of seven calendar days. Calculation of 80% of an employee’s wages is different, depending on whether they have fixed pay or variable pay. Details of how employers should calculate claims for periods starting on or after 1 May 2021 will be set out in updated guidance “in due course”.

Further detail is set out in the following guidance:

What about National Insurance and pension contributions?

Employers must pay employer National Insurance Contributions and pension contributions. Employers will not be able to claim this under the scheme.

Can an employer claim for a furloughed employee who is serving notice?

For claim periods starting on or after 1 December 2020, employers cannot claim for any days on or after that date during which the furloughed employee was serving either a contractual or a statutory notice period. This includes employees serving notice of retirement or resignation. The guidance states that if an employee subsequently starts a contractual or statutory notice period on a day covered by a previously submitted claim, the employer will need to make an adjustment.

The guidance states that if an employee is made redundant, statutory redundancy pay and statutory notice pay should be based on their normal, pre furlough, wage. However, the law in relation to notice pay is complicated and employers should seek advice.

What is the process for making a claim?

Employers can no longer submit claims for claim periods ending on or before 31 October 2020.

Claims from 1 November 2020 must be submitted by 11.59 p.m., 14 calendar days after the month the employer is claiming for. If this time falls on the weekend or a bank holiday, claims should be submitted on the next working day. HMRC may accept a claim after the relevant deadline if the employer had a reasonable excuse. The guidance gives a number of examples of when an employer may have a reasonable excuse.

The deadlines to submit claims for February to September 2021 are as follows:

February: 15 March 2021
March: 14 April 2021
April: 14 May 2021
May: 14 June 2021
June: 14 July 2021
July: 16 August 2021
August: 14 September 2021
September: 14 October 2021.

Further detail is set out in the following guidance:

How long does the extension last for?

The CJRS will remain open until 30 September 2021. Employers should continue to keep up to date with any changes to the guidance.

Comment

For claim periods starting on or after 1 December 2020, by making a claim, an employer accepts that HMRC will publish information on Gov.uk about employers who have made claims under the scheme. On 26 January 2021, HMRC published the first information about employers who claimed under the CJRS in December 2020.

The employer information that will be published is the name of the employer; if the employer has a company reference number, that number; and an indication of the amount of the CJRS claim made by that employer within a banded range. The banded ranges are set out in the guidance. That information may be withheld if HMRC is satisfied that publication would result in serious risk of violence or intimidation to certain individuals or individuals living with them. Employers will need to provide evidence of why they think there is a serious risk of violence or intimidation. HMRC will not provide details where employers paid back the whole grant before the list was produced.

Further detail is set out in the following guidance:

HMRC will continue to check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. HMRC will continue to monitor businesses after the scheme has closed.

As a result of the extension of the CJRS, the Job Retention Bonus (JRB) has fallen away and has now been withdrawn. The Government previously announced that it will redeploy a retention incentive at the appropriate time.

This note specifically relates to claims for periods that start on or after 1 November 2020. For claims for periods ending on or before 31 October 2020, see our previous post here.

Originally posted 13 November 2020. Updated 19 March 2021.

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