COVID-19 Advice for Employers and Employees

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16 November 2020: First Published

Background

Since making its initial announcement on 5 November 2020 that the CJRS (furlough scheme) would be extended until 31 March 2021, the government published a variety of guidance documents including a Policy Paper (5 November) and the Extended Furlough Guidance (10 November), which itself was amended within 48 hours of being published.  Then on 13 November, HM Treasury published its fifth Treasury Direction, which together with the previous Treasury Directions, form the legal framework for the CJRS (furlough scheme).

As the legal framework for the CJRS (furlough scheme) the fifth Treasury Direction: 

• formally extends the CJRS from 1 November 2020 until 30 April 2021;

• sets out the detail of how the CJRS will operate until 30 April 2021;

• withdraws the Coronavirus Job Retention Bonus.

Key Features of the Extended CJRS

From the plethora of existing documents published prior to the latest Treasury Direction, we were already aware that the extended CJRS would operate in many of the same ways as it operated in its original iteration until the end of August 2020, but there were some key differences between the pre-and-post extension that Employers should be aware of, namely:

• Employers do not need to have used the CJRS before to be eligible to claim a grant under the extended scheme. There is also no limit on the number of employees an employer can claim for in respect of claim periods from 1 November 2020 onwards.

• Furlough agreements must be in place before the start of the relevant claim period (but may be varied during the claim period). It should be sufficient to update an earlier furlough agreement, provided it is done before the employee is furloughed under this phase of the CJRS. There was a small window of opportunity for employers to backdate agreements, as we alerted employers to here, but this has now passed.

• Employers can claim for an employee on any type of contract who were employed and on the payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission between 20 March 2020 and 30 October 2020 notifying HMRC of a payment of earnings for the employee. However, it is not necessary for the employee to have been furloughed before.

• Employers can claim under the extended CJRS for furloughed employees who are serving statutory notice periods during November, but the guidance remains silent on contractual notice.  For claim periods starting on or after 1 December 2020, an employer cannot claim for any days on or after 1 December 2020 during which the employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation).

• In relation to claims for transferring employees, the updated guidance was at first unclear. However, on 12 November 2020, the guidance was corrected to clarify that it is possible for employers to make claims under the extended CJRS in respect of an employee who transfers under TUPE or the business succession rules if the employee:

• Transferred from their previous employer on or after 1 September 2020.

• Was employed by either their old or new employer on 30 October 2020.

• Was on a PAYE RTI submission to HMRC by their old or new employer between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

• It is now a condition of making a claim that the employer accepts that HMRC will publish information about CJRS claims on the internet. This includes the name of the employer and a “reasonable indication” of the amount claimed. An exception may be made for employers who can show that publication would expose their workforce to “serious risk of violence or intimidation”.

Making CJRS Claims

Whilst the rules published in the latest Treasury Direction cover a wide range of issues including eligibility, furlough agreements, permitted activities during furlough, business succession (including TUPE) and publication of CJRS claimants’ details, they also cover claim periods; reference salaries and calculating the usual hours of work, the key points of which we’ve noted below:

• Employers can make claims under the extended CJRS from 11 November 2020. Therefore, any grant in respect of the period 1 to 11 November 2020 will be paid in arrears. It is possible for employers to make retrospective furlough claims for periods dating back to 1 November 2020. However, to do so, they must put in place a retrospective furlough agreement by no later than 13 November 2020. Employers will therefore need to act quickly in respect of any employees who they wish to make a retrospective claim for but do not already have an agreement with. An employee will need to have been furloughed during this time and not working their usual hours, even though the furlough agreement may be backdated.

• Claims from 1 November 2020 must be submitted by 11.59 pm, 14 calendar days after the month the employer is claiming for. If this time falls on a weekend, then claims should be submitted on the next working day. This means that claims for November 2020 must be submitted by 11.59 pm on 14 December 2020.

• HMRC may accept a claim made after the relevant deadline if the employer has a “reasonable excuse” for failing to make the claim in time and then claimed “without delay” after the excuse no longer applied. There is no indication given in the guidance of what may amount to a reasonable excuse. However, HMRC will not consider a reasonable excuse until after the deadline for making a claim has passed, meaning it will not be possible to obtain advance clearance for missing the deadline. Employers will therefore be taking a risk in delaying a claim and relying on this exemption.

• Employers will only be able to amend claims for periods after 1 November 2020 if they do so within 28 calendar days of the month the claim relates to (unless this falls on a weekend, in which case the deadline is the next working day). For example, this means that the deadline for amending a claim for November 2020 will be 11.59 pm on 29 December 2020 (accounting for the bank holiday on 28 December 2020).

How CJRS changed on 1 November and 1 December 2020

Since 1 November 2020, employers are able to furlough employees on a flexible basis if they were on their PAYE payroll before midnight on 30 October 2020. The employer must have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for any employee being claimed for. Neither the employer nor the employee needs to have used the CJRS previously. 

The level of support available under the extended scheme, which currently runs until 30 April 2021, will initially mirror that available under the CJRS in August, with the government paying 80% of wages for hours not worked up to a cap of £2,500 per month for claim periods running to 31 January 2021. 

The grant and cap will be reduced in proportion to the hours not worked by an employee. Employers will need to cover employer NICs and employer pension contributions on all amounts paid to an employee (including those amounts covered by the CJRS grants). They will also need to continue to pay an employee for hours worked in the normal way. As previously under the CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish. 

The government will review the operation of the CJRS in January 2021, to determine whether the economic circumstances are such that employers should be asked to contribute more. 

Since 1 December 2020, employees under notice are no longer eligible and from February 2021, HMRC will also start to publish information about employers who submit claims in December and January, in order to provide greater transparency and deter fraud.

The JSS has been postponed as a result of the extension of the CJRS. It is not currently known whether it will be introduced after the CJRS ends. The JRB was withdrawn by the fifth Treasury direction following the extension of the CJRS. 

HMRC published updated guidance regarding the extended CJRS on 10 November 2020, and the fifth Treasury direction on 13 November 2020 (dated 12 November 2020). Guidance for claim periods from February 2021 onwards, as well as a further Treasury direction, have not yet been published.

Government Publications

The Fourth (latest) Treasury Direction
HM Treasury Policy Paper
Extended Furlough Guidance
Check if you can use the CJRS
Check which employees you can put on furlough