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Speaking in the Commons on 5 November, Rishi Sunak announced that the Coronavirus Job Retention Scheme will continue to the end of March 2021. This followed the government announcement on 1 November, that the scheme would be extended until the end of November, so you could be forgiven for blinking and missing it.
The full guidance for the scheme as it works from 1 November to 31 January 2021 will be available on 10 November. In January, the scheme will be reviewed and guidance for claims from 1 February onwards will follow that review.
In the meantime, HMRC has published a policy paper, which we’ve summarised here.
What are the key points?
- The furlough scheme remains open until 31 March 2021
- The scheme rules remain the same, except where the government say they don’t (unhelpfully this may mean we won’t know if something contained in the prior rules which isn’t mentioned in the policy paper remains the same, or just won’t be covered off until the full guidance is published on 10 November)
- For claims running to January, employees receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month (proportional to the hours not worked)
- The grant will be fully funded by the government, although employers must pay for any hours worked, and fund pension and NI contributions on both furlough pay and pay for any worked hours
- Employers can choose to top up beyond the maximum government contribution, but don’t have to
- In January, the government will conduct a review and decide whether employers will be asked to contribute more
Who can claim?
- Employers across the UK, whether their business is open or closed, and regardless of whether they used the scheme previously
- We’ll be able to see exactly who, as the government intends to publish details of employers who claim under the extended scheme, starting from December
- The extended scheme will cover employees who were employed and on PAYE payroll on 30 October 2020. The employer must have made a PAYE RTI submission between 20 March and 30 October referencing payments to that employee.
- Employees can be on any type of employment contract, as is currently the case
- Employees do not have to have been previously furloughed to be eligible
- Employees who were on the payroll on 23 September, their employment ended, and they were re-employed, are eligible
Is flexible furlough available?
- The extended scheme will be flexible, and employees can be furloughed full time or be on “flexi furlough”
- Employees can be on furlough for any amount of time or shift pattern, full or part time furlough and hours worked can be varied in agreement with the employee (the minimum claim period however remains 7 consecutive days)
- As before, when employees are on furlough and they can’t do any work for their employer. They can work for a different employer, volunteer, or take part in training for their furlough employer
How is furlough pay calculated?
- For employees who have been furloughed before: the calculations used previously for reference pay and usual hours will apply
- For employees who meet the criteria of the current scheme but were not previously eligible for the furlough scheme:
- on a fixed salary - 80% of the wages payable in the last pay period ending on or before 30 October 2020
- whose pay varies - 80% of the average payable between the start date of their employment or 6 April 2020 inclusive (whichever is later) and the day before their CJRS extension furlough periods begins
- the usual hours will be the average hours worked between (these dates are inclusive):
- the start date of the 2020 to 2021 tax year, (for example, 6 April 2020)
- the day before their CJRS extension furlough periods begins
- For all other employees: the policy paper says employers must use the method set out on this link but, at the time of writing this, that page states it is suitable for calculating claims up to 31 October and will be updated “shortly”
Can those shielding, sick or with caring responsibilities be furloughed?
- Employees who can’t work because they’re shielding (in line with public health guidance), or staying home with someone who’s shielding, or have caring responsibilities arising from coronavirus can be furloughed
- The furlough scheme isn’t intended for short term sickness but employers can choose, for business reasons, to furlough employees who are off sick
What needs to be in the written furlough agreement?
- To be eligible for the grant, employer must have confirmed to the employee in writing that they have been furloughed, or flexibly furloughed. The employee does not have to provide a written response (but we advise it’s good practice to make sure they do)
- As previously, the employer must have the contractual right to reduce the pay and working hours of the employee they want to furlough
- The terms of the furlough agreement must:
- Reflect the hours the employee has actually worked, or not worked, over the period of the agreement
- Allow the employer to satisfy the terms of the scheme so they can make a claim in relation to hours not worked (this is a very wide catch all – we can provide employers with a furlough agreement to make sure you can satisfy the requirements to claim the grant)
Can employers rely on a retrospective furlough agreement?
- Provided the agreement is put in place before 14 November, if it says it took affect from 1 November (and meets the rest of the requirements) it will be valid
When can claims under the extended scheme be submitted?
- Employers will be able to claim from 8am on 11 November and can be made in advance and/or in arrears for the period 1 November to 11 November, from the week commencing 9 November
- Grants are expected to be paid 6 working days after the first claim
What about JSS and the Job Retention Bonus?
- The launch of the Job Support Scheme, which was supposed to come into effect on 1 November, has been postponed. There is no comment as to whether it will be rolled out at a later date but all of the guidance pages relating to the scheme now contain a statement that they were withdrawn on 1 November
- The Job Retention Bonus (JRB) has also been postponed. The policy paper states that a retention incentive will be rolled out at an appropriate time. In other words, no guarantees it will be in the guise of the previously announced JRB