(Yet) Further Guidance on Extended Furlough Scheme Published
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:
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
- The CJRS will remain open until 31 March 2021.
- From 1 November 2020 employers may claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2500 per month. The cap is proportional to the hours not worked. Employers will need to pay employer national insurance contributions and pension contributions.
- Employers will be able to furlough any employee who was on its payroll at 30 October 2020 (which means an employee for whom a real time information (RTI) submission was made between 20 March and 30 October 2020).
- For claims from 1 November 2020 onwards, it is no longer a requirement that the employee has been furloughed previously or that the employer has used the CJRS previously.
- For claims from 1 November 2020 onwards, there will no longer be a maximum number of employees who can be furloughed.
- As was the position up to 31 October 2020, employees may be fully furloughed or flexibly furloughed. If they are fully furloughed, they cannot undertake any work for the employer. If an employee is flexibly furloughed, they can work for any amount of time and on any work pattern, but they cannot work for the employer during hours when they are recorded as being on furlough.
- Claims in respect of the month of November 2020 must be made by 14 December 2020 and claims for the following months must be made by day 14 of the following month. If it falls during a weekend, then claims should be made on the next working day.
- As was the position up to 31 October 2020, the employer must agree the furlough arrangements with the employee (or with a recognised trade union), must confirm the details of the agreement in writing and keep a record of it five years. The agreement must be consistent with employment, equality and discrimination laws. Records of the hours worked and the number of hours for which an employee is furloughed must also be kept.
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.