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Following the recent announcement of the extension of the Coronavirus Job Retention Scheme (CJRS or “furlough scheme”) and the suspension of the Government’s Job Support Scheme and Job Retention Bonus and then of the further extension to the furlough scheme to 31 March 2021 and additional details as to its operation, the Government updated its various guidance documents yesterday. Employers utilising the furlough scheme will need to review this guidance to ensure that their ongoing arrangements comply with the requirements of the CJRS.
The guidance is now contained in thirteen separate notes as follows:
Check if your employer can use the Coronavirus Job Retention Scheme
Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme
Claim for wages through the Coronavirus Job Retention Scheme
Find examples to help you calculate your employees' wages
Calculate how much you can claim using the Coronavirus Job Retention Scheme
Steps to take before calculating your claim using the Coronavirus Job Retention Scheme
Other types of employees you can claim for
Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme
Pay Coronavirus Job Retention Scheme grants back
Holiday entitlement and pay during coronavirus
Guidance on shielding and protecting people who are clinically extremely vulnerable from COVID-19
Full examples of how to calculate the amount you should claim for an employee who is flexibly furloughed
Individuals you can claim for who are not employees
The updated guidance contains broadly cover the same information as covered in the policy paper on which we reported last week. The key points for employers to note are as follows.
Main Points to Note
Employees who, following public health guidance, are classed as clinically extremely vulnerable (who were previously advised to shield) can be furloughed (as can employees who are unable to work due to caring responsibilities including looking after children).
From 1 November 2020, the rules around furloughing employees returning from any parental related leave (such as maternity, adoption or shared parental leave) have been simplified. From 1 November 2020 the normal scheme rules apply to such employees i.e. they must have been on the payroll at the specified times. Employees who are on maternity leave who wish to end their maternity leave early in order to be furloughed must give eight weeks’ notice to their employer of their return to work and may not be furloughed until the end of the eight week notice period.
As noted previously, HMRC intends to publish details of employers who make claims under the extended CJRS, starting from December 2020. This may influence employers in considering whether it is appropriate, from a reputational point of view, to use the extended CJRS.
Calculating the wages that can be reclaimed under the CJRS remains complicated. The main change is that employers now need to identify the correct “reference period” to use to work out the employee’s usual wages. For employees on fixed pay, this will be the last pay period ending on or before 19 March 2020 for employees who were on the payroll on 19 March 2020 - meaning that the employer made a payment of earnings to them in the tax year 2019 to 2020 which was reported to HMRC on a Real Time Information (RTI) Full Payment Submission (FPS) on or before 19 March 2020 - or were on furlough (i.e. the employer made a valid CJRS claim for in a claim period ending any time on or before 31 October 2020). For all other employees the reference period is the last pay period ending on or before 30 October 2020 - this will only apply for periods starting after 1 November 2020.
For employees on variable pay, if they were on the payroll on 19 March 2020 - meaning that the employer made a payment of earnings to them in the tax year 2019 to 2020 which was reported to HMRC on a Real Time Information (RTI) Full Payment Submission (FPS) on or before 19 March 2020) the employer should calculate 80% of the higher of the wages earned in the corresponding calendar period in the tax year 2019 - 2020, and the average wages payable in the tax year 2019 to 2020. For all other employees, for claims from 1 November, employers should calculate 80% of the average wages payable between 6 April 2020 (or, if later, the date the employment started) and the day before they are furloughed on or after 1 November 2020.
An important deadline to note is that a furlough agreement can be made retrospectively with effect from 1 November 2020 and will be valid for the purposes of making a claim under the CJRS provided that it must be in place by this Friday 13 November 2020. Backdating is of course only possible if the individual qualifies for furloughing under the CJRS – an employee who has been working their usual hours therefore cannot be retrospectively furloughed.
Those who TUPE transfer can still be furloughed by the new employer. HMRC has confirmed that, notwithstanding the wording of the guidance, a transferring employee qualifies for coverage under the CJRS provided that the employee in question was employed by their prior employer on or before 30 October 2020 and transferred under TUPE from them to their new employer on or after 1 September 2020. It is not clear whether this latter date should be 1 November 2020 i.e. when the extended CJRS took effect.
Employees who were made redundant on or after 23 September 2020 may be re-employed and put on furlough as long as they were employed and on the employer’s payroll on or before 23 September 2020. This means that an RTI submission must have been made for the employee between 20 March and 23 September 2020. Similar rules apply for employees who are employed on fixed term contracts – their contracts may be extended or renewed and the employee put on furlough.
The Government will review whether employers will be able to claim for employees who are serving a notice period starting on or after 1 December 2020 and will publish further guidance on this point later in November. Whilst it is already the case that the CJRS will not cover payment in lieu of notice or statutory redundancy payments, this means that the Government may decide to stop covering the relevant proportion of the wages payable to employees who are made redundant while they serve out their notice periods. This may have an impact on employers’ willingness to utilise the CJRS and for how long they are prepared to continue to do so.
The continued operation of the CJRS will be reviewed in January 2021 raising the possibility of the Government reinstating the obligation on employers to contribute a proportion of employees’ wages which applied in respect of the August to October period under the CJRS.