From the 1 November 2020, the UK government will pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month. Employers and employees do not need to have benefited from the scheme before to claim.
Claims can be made for those employed on 30 October 2020, provided an RTI submission had been made between 20 March 2020 and 30 October 2020 notifying a payment of earnings for the employee.
This iteration of the CJRS will remain open until the 31 March 2021 with the government set to review the terms of the scheme in January 2021
In his announcement on 31 October of a new national lockdown for England from 5 November until 1 December, the Prime Minister confirmed that the CJRS has been extended for a further month.
The CJRS was due to have ended after being scaled back to cover 60% of salaries during October.
Details confirmed by the Chancellor reveal that the scheme will retain the flexible element, but the level of government support will return to the levels given in August. In this iteration, furloughed employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500.
Employers will be able to furlough employees full time or part time, but to be eligible for the grant an employee must have been on an RTI submission made to HMRC before 23.59 on 30 October 2020.
Employers will only be asked to cover employer national insurance and pension contributions for hours not worked. They will continue to pay for hours worked as normal. Employers can top up furloughed staff’s salary to the previously contracted amount if that is what has been agreed with the employee.
The government has expanded its job support scheme for businesses that remain open (JSS Open)
The key changes are:
All employers with a UK bank account and UK PAYE schemes can claim the grant. There is no requirement to have previously used the Coronavirus Job Retention Scheme (CJRS). However, employees added to the scheme must have been on the payroll as at 23 September 2020. For the avoidance of doubt this means that a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.
Information for Employers:
Employers will pay 5% of non-worked hours, capped at £125 per month, and NICs and automatic enrolment pension contributions in full as a contribution.
Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
Employers must agree the new short time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
Job Support Scheme Closes (JSS Closed)
Employers who are legally required to close their premises (JSS Closed) as a direct result of coronavirus restrictions, a policy resembling furlough will support the wage costs of employees. Each employee who cannot work due to the restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, capped at £2,083.33 per month.
Employers who retain staff for three months after the furlough scheme ends will receive £1,000 government ‘bonus’ for each employee, the Chancellor has announced.
The bonus will be:
Employees must earn above the National Insurance lower earnings limit (£520 per month) on average between 31 October 2020 when the CJRS ends and the end of January 2021.
The bonus payments will be made from February 2021.
Although a modest sum, this will undoubtedly be useful, coming at a time when those businesses which have deferred tax debts begin to work out how to pay these. For example, self assessment taxes due at the end of January (by the unincorporated business owner) and VAT at the end of March.
Starting from November, the government’s new Job Support Scheme will cover up to 22% of pay for workers in “viable” jobs for the next six months. The scheme will replace the current Coronavirus Job Retention Scheme due to end on the 31 October.
Under the new scheme workers would need to work at least a third of their normal hours to qualify. Employers will pay staff for the hours they work but for the hours they don’t work, the government and the employer will each cover one-third of the lost pay. The government’s contribution will be capped at £697.92 per month.
Subject to the detailed rules applying, anyone employed as of yesterday (23 September 2020) is eligible, and all small and medium-sized businesses can apply, although larger businesses can only use the scheme if their turnover has fallen during the pandemic. Employers do not have to have used the furlough scheme previously. Large employers are not expected to have been making capital distributions, such as dividend payments or share buybacks while claiming the grant.
Sunak also clarified that employers retaining furloughed staff on shorter hours can claim both the Job Support Scheme and the Job Retention Bonus, which will be available in February next year.
The Chancellor has announced the government’s plans to change the CJRS which will now be re-engineered to support businesses sending staff back to work. Employers will be able to put staff on part-time furlough, claiming the CJRS grant for a portion of their salary.
Flexible furloughing of employees starts from 1 July onwards. The hours and shift patterns employees work can be decided by the employer to suit the needs of their business. Employers will pay the wages for the time employees are in work and can apply for a job retention scheme grant to cover any of the usual hours the employee is still furloughed for. Employees can still be kept on full furlough if needed.
Note for employers:
Employees must have been furloughed under the initial scheme (CJRS V1) for them to be eligible for a furlough grant under the revised scheme (CJRS V2). Note that since there is a three-week minimum furlough requirement under the initial rules, it follows that any new period of furlough leave must have started by 10 June 2020 to be complete when the initial scheme ends on 30 June and so ensure the employee remains eligible for CJRS V2 from the 1 July.
In July the grant will be calculated on the same basis (the lesser of 80% of pay and £2,500). The intention is that the government will reduce its contribution over the remaining months of the scheme – August to October – with a corresponding increase in the employer contribution. Note that from 1 August onwards, the scheme will no longer cover the cost of employers’ National Insurance nor pension contributions applicable to the grant.
Further points to note:
What you need to know
Start date: 1 March 2020
End date: 31 October 2020 - the scheme will change after 31 July.
Employees need to be on payroll (ie on an RTI report) as of: 19 March 2020
Claims portal opened: 20 April 2020
Who can claim:
Any employer with a UK PAYE scheme and a UK bank account.
How much can be claimed:
A grant of 80% of furloughed employees' pay up to a maximum of £2,500 per month, plus employers' NIC and auto-enrolled pension contribution.
How long does the scheme run:
From 1 March 2020 until 31 October 2020 - the scheme will change after 31 July.
From August, employers currently using the scheme will have more flexibility to bring their furloughed employees back to work part time while still receiving support from the scheme.
This revised scheme will run for three months from August through to the end of October. Employers will be asked to pay a percentage towards the salaries of their furloughed staff. The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month. More specific details and information around its implementation will be made available by the end of May.
Which employees can be claimed for: Employees who were on payroll (ie on an RTI report) as of 19 March 2020, and have been put on furlough. Employers should write to their employees confirming that they have been furloughed and keep a record of this communication until at least 30 June 2025.
What does furlough mean: Employees on furlough cannot do any work for the organisation. The further Treasury Direction under Sections 71 and 76 of the Coronavirus Act 2020 published on 22 May emphasises that the training activities a furloughed employee can undertake while on furlough must not provide a service to the employer, nor can they contribute to the business activities or generate income or profit for the employer. They must however be relevant to the employee's employment.
How much do I have to pay the employee: The employee must be paid in accordance with their employment contract (which may be amended by agreement) and they retain their usual rights at work. The employee must be paid at least as much as the amount of the grant received from HMRC.
When will grants be paid: Within six working days of a claim being submitted.
How long do staff have to be furloughed: The grant can only be applied for a minimum period of three weeks, although this can be extended. It is possible to move employees in and out of furlough as business requirements evolve. However good records will need to be kept to validate any grants claimed and this will be subject to the minimum furlough period of 3 continuous weeks.
Who isn't covered by CJRS
The scheme isn't open to those businesses that:
The scheme doesn't cover employees who: