Furlough scheme extended until March; Job Support Scheme and Job Retention Bonus postponed

In light of the country entering into a second lockdown, the government has announced that the Coronavirus Job Retention Scheme (also known as the CJRS or the “Furlough Scheme”) has been extended until the end of March 2021 (known as the Extended CJRS).

This is welcome relief for many employers and employees. The Extended CJRS offers a more generous level of support to employers than the last couple of months, with the government’s contribution initially matching that offered during the last national lockdown. The Job Support Scheme (or JSS), which had been scheduled to replace the CJRS as of 1 November, and the Job Retention Bonus (or JRB) planned for February 2021 have been postponed accordingly. 

The Policy Paper on the Extended CJRS is available online. The government has stated that it will review the Extended CJRS at the end of January and consider changes to the scheme at that point. Full guidance on the application of the Extended CJRS until 31 January is expected to be published on 10 November. Details of the scheme to apply in February and March 2021 will follow the government’s review, but the government has stated that it will consider whether reduced rates can be implemented at that time, with employers asked to contribute more.

In summary, based on what we know so far:

  • What will be covered? The Extended CJRS will initially offer employers the same rates as were available in August, before tapered rates were introduced in September and October. Reduced rates may apply in February and March following the government’s review in January. The eligibility deadline has also been extended and now requires employees to have been on the employer’s PAYE payroll by 23:59 on 30 October. For a summary of the differences between the Extended CJRS and the CJRS in September and October, see the table at the end of this note.
  • Am I an eligible employer for the Extended CJRS? There do not appear to be any new conditions to access the Extended CJRS aside from those already outlined in the current guidance (i.e. employers must have a UK bank account and operate a UK PAYE scheme). The Extended CJRS does not require that either the employer or the employee has previously used the CJRS in order to be eligible.
  • Can I furlough employees on a part time basis only? The Extended CJRS allows for flexible furloughing in addition to full-time furloughing. This means that employers can still bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.
  • How will claims under the Extended CJRS be calculated? Claims under the Extended CJRS will be based on the hours that the employee is not working, calculated by reference to their usual hours worked in a claim period. In respect of employees that have previously been furloughed, employers must use the same calculations for calculating reference pay and usual hours as they used under the CJRS. For employees that have not previously been furloughed, alternative calculation methods apply. For employees on a fixed salary, the calculation of reference pay and usual hours will be based on the last pay period ending on or before 30 October 2020. For those whose pay and/or hours vary, the calculation is based on the average (hours and/or pay) between the start date of their employment or 6 April 2020 (whichever is later) and the day before their Extended CJRS furlough period begins (inclusive). The wage caps will be calculated in the same way as under the CJRS.
  • Do I need to pay my employees the extended furlough grant amount, or will HMRC? The former. As previously under the CJRS, employers should continue to pay furloughed employees for hours worked in the normal way. They are also still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
  • Can I rotate employees on and off the Extended CJRS? There is no minimum furlough period. However, each claim will need to relate to a minimum period of seven consecutive calendar days.
  • Do employees need to consent to the Extended CJRS? Employers will need to agree any working arrangements with employees and keep these agreements on file. Employers will also need to report to HMRC hours worked and the usual hours an employee would be expected to work in a claim period. Please get in touch with your usual Macfarlanes contact should you require further advice on consent and furlough agreements.
  • When can I claim under the Extended CJRS? Employers are able to claim from 8am on Wednesday 11 November 2020. Claims can be made in advance and also in respect of furloughed employees’ wage costs from 1 November, with retrospective furlough agreements valid provided that these are put in place up to and including 13 November 2020. Claims relating to November 2020 must be made by 14 December 2020 and claims for each subsequent month should also be submitted by day 14 of the following month.
  • Will the fact that I have claimed be public? Beginning from December, HMRC will publish details of employers who make claims under the Extended CJRS. It is not yet clear exactly what is meant by “details of employers”, but further information on this point is expected in the guidance being released on 10 November.

Changes under the extended CJRS:

  Tapered CJRS (September) Tapered CJRS
(October)
Extended CJRS (November-March, with the potential for rates to change in February and March)
Eligibility deadline Employees needed to
have been furloughed
by 10 June in order to
be eligible
Employees needed to
have been furloughed
by 10 June in order to
be eligible
Employees must have been on the employer’s PAYE payroll by 23:59 on 30 October. This means a Real Time Information submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
Eligibility for employees Only employees in respect of whom you have successfully made a claim will be eligible for more grants under the scheme. - Neither the employer nor the employee needs to have previously used the CJRS.
Government’s contribution to wages 70% up to
£2,187.50
60% up to
£1,875
80% up to
£2,500
Employer’s contribution to wages 10% up to
£312.50
20% up to
£625
No top up
required
Employee receives 80% up to
£2,500
80% up to
£2,500
80% up to
£2,500
Government’s NICs and pension contributions No contribution No contribution No contribution
Employer’s NICs and pension contributions payable Yes Yes

Yes – employers are responsible for paying employer NICs and pension contributions, however only for the hours the employee does not work.

The Policy Paper confirms that the remainder of the scheme rules (such as in relation to holiday and retaining statutory rights) remain the same as the previous CJRS rules, except where stated otherwise.

The current employee and employer guidance only applies to the furlough scheme to 31 October, not to the Extended Scheme. It says that the pages will be updated shortly to tell employers when they can claim the extension; and (ii) the rules relating to the extension.

We will keep clients updated once we have had sight of the additional guidance on the Extended CJRS and, presumably, a further Treasury Direction to implement the extension.