Until 30 June 2021, the UK government will continue contributing 80% of an employee’s wages for furloughed employees, capped at £2,500, but from 1 July this contribution will reduce on a sliding scale until the scheme ends at the end of September.
For July, employers will only be able to claim 70% of wages for furloughed staff, up to a maximum of £2,187.50
For August and September, employers will only be able to claim 60% of wages for furloughed staff, up to a maximum of £1,875
This means that employers who intend to continue to rely on the furlough scheme will need to make up the difference between what they can claim and what they are required to pay furloughed employees (80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough) if they want to remain eligible for the CJRS grant.
With many employers still not able to fully reopen and many still struggling to generate revenue to cover existing operating cost, this additional uplift in costs may cause them to reconsider their position.
We have collated here the key information relating to the recently extended CJRS (furlough scheme) that is intended as general guidance. If you require specific legal advice, please book your Free consultation call with one of our team of employment law specialists.
The Extended (CJRS) Furlough Scheme
With the introduction of new, tougher lockdown restrictions across the United Kingdom forcing many more business to close, many Employers will again be looking to take advantage of the Extended (CJRS) Furlough Scheme.
Below, we consider how the extended (CJRS) furlough scheme changed on 1 November and 1 December 2020.
How the (CJRS) Changed on 1 November and 1 December 2020
Since 1 November 2020, employers have been 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.
Here we provide more detailed Guidance on the Extended (CJRS) Furlough Scheme.
Advice & Guidance for Employers & Employees
The COVID-19 lockdown restrictions continue to present numerous and complex challenges for Employers and Employees alike. If you are experiencing challenges and require specialists advice, book a free consultation with our team of employment law specialists.
The Chancellor has produced a third iteration of the Treasury Direction in relation to the Coronavirus Job Retention Scheme (CJRS) and this was published on Friday 26 June 2020. The new Direction sets out the rules that will apply under the amended CJRS from 1 July 2020, which allows for ‘flexible furlough’ arrangements, until 31 October 2020, when the scheme ends.
Third Treasury Direction on the UK Coronavirus Job Retention Scheme
The updated Treasury Direction which legally underpins the Coronavirus Job Retention Scheme (CJRS) and which can be read here, sets out the rules that will apply under the amended CJRS from 1 July 2020. The new rules allow for ‘flexible furlough’ arrangements, until 31 October 2020, when the scheme ends. In summary the Treasury Direction largely reflects the recent Guidance and clarifies a number of points:
Flexible furlough
From 1 July to 31 October, employers are permitted to use the CJRS flexibly. This means the scheme enables part-work/part-furlough. Employers can claim under the scheme for time furloughed and will have to pay employees normally for time spent working.
Cut-off dates
The new Direction confirms that the cut-off date for making claims under the original CJRS, as set out in the previous Directions and in force until 30 June, is 31 July.
It also confirms that a business will only be able to participate in the amended CJRS that applies from 1 July if it has made a claim under the original scheme by 31 July in respect of an employee who has been furloughed for a minimum of three weeks beginning on or before 10 June.
From 1 July, the scheme is changing from month to month. Although more than one claim can be made in a month, a claim must start and end within the same calendar month and must relate to seven or more consecutive days. An exception to the seven-day claim period is made for “orphan periods” at the beginning or end of a month.
Maximum number of employees you can claim for
The number of employees who can be claimed for post 1 July cannot exceed the maximum number in any one claim made for furlough periods prior to 1 July – the new Direction refers to this as the “high-watermark number”.
Exceptions to 10 June cut-off and “high – watermark number”
The new Direction confirms the exception to the 10 June cut-off and the “high-watermark number” for family leave returners and armed forces reservists. There is a similar exception where a TUPE transfer takes place after 10 June 2020, in relation to transferring employees who were furloughed by the transferor under the original CJRS (but who cannot satisfy the 10 June cut-off as regards the transferee). The Direction confirms that the number of these previously-furloughed, transferring employees is added to the transferee’s cap in the same way as “returning employees”.
Financial support for employers
The financial support for employers will not change until 1 August 2020. From 1 August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
From 1 September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
From 1 October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
Requirement to reach an agreement on flexible furlough
In our previous bulletin, analysing the recent Guidance on flexible furlough, we referred to the fact that the Guidance is not clear whether the agreement to flexible furlough needs to be full written agreement with employees as opposed to written confirmation / letter as has been applicable for full furlough.
The new Direction confirms the requirement to reach agreement on flexible furlough arrangements but says that the agreement only needs to be confirmed in writing by employers (which may be in electronic form such as an email). Therefore, any flexible furlough arrangements require communication and letters/ emails to employees to evidence agreement. A record of the agreement must be retained by the employer until at least 30 June 2025. As with full furlough, the agreement for flexible furlough can be by means of a collective agreement.
Employers should note that there is a new requirement that the agreement must have been made before the beginning of the period to which the CJRS claim relates – and must not be made retrospectively. However, the Direction confirms that an agreement can subsequently be varied.
Calculating wages
The Direction provides various examples of how to calculate employee wages based on usual hours and hours worked, to determine how much can be claimed under the CJRS.
The requirements are not straightforward and will have to be worked through carefully especially if the claim period does not align with a calendar month. To align with a calendar month, a furlough period may have to start mid-week. In all other cases (for example, if a furlough period started on Monday 6 July), the complex flexible furlough calculations will have to be undertaken. The government has worked through some examples and has updated its calculator on the gov.uk website to assist with hours calculations to claim the CJRS grant.
If you are considering bringing back your workforce part-time, we recommend you start planning and discussing with employees as soon as possible. Bear in mind that some employees will have childcare issues and others may be shielding or live with someone who is shielding. The government expects employers to be understanding and flexible with employees in these situations.
Purpose of CJRS / redundancy
One point on which urgent clarification is being sought is that the new Direction now says that the purpose of the CJRS is to “continue the employment of employees” which begs the question can it be used to pay notice pay or any costs associated with termination of employment? This new wording appears to contradict the Employee Guidance on the CJRS which still states, “your employer can still make you redundant while you are on furlough”. HMRC have apparently referred this question to a specialist team.
This is clearly of significance to some employers who are presently exiting people or are planning to and we will of course keep it under review.
Support for Employers
The COVID-19 pandemic and associated furlough scheme continues to present numerous and complex challenges for Employers.
If you are an Employer and require advice and support on extending full furlough, introducing flexible furlough, or are contemplating a restructure/reorganisation and/or redundancies as a result of the ongoing COVID 19 restrictions, call us now on 0800 612 4772 or Contact us via our website and we will set out clear options for you to help ensure you comply with your legal obligations.
On 30 April 2020, HMRC published another updated version of its guidance on the Coronavirus Job Retention Scheme which will directly affect the ability of employers who inherited employees through the operation of a TUPE transfer between 28 February and 19 March 2020.
Under the current version of the Employers’ CJRS guidance , an employer can claim under the CJRS in respect of employees who TUPE transferred after 28 February 2020. However, between 15 April and 30 April 2020, the guidance was updated to state that an employer who inherited employees through the operation of a TUPE transfer prior to 19 March 2020 would be in the same position as any other employer in terms of eligibility.
That change put employers who inherited employees close to the 19 March eligibility cut-off at a disadvantage because eligibility under the CJRS is subject to the existence of an RTI submission notified to HMRC on or before 19 March 2020. If the inherited employees’ pay was processed for the first time in the March payroll towards the end of the month, which may have been the case where, for example, there was a TUPE transfer during early March, then the cut-off date for an RTI submission of 19 March 2020 may not be met, effectively creating a ‘black hole’ for employees who TUPE transferred between 28 February and 19 March and who weren’t notified to HMRC on an RTI submission before 19 March 2020.
Welcome Furlough News for TUPE Transferees
On 30 April 2020, the Employers’ CJRS guidance was updated to change the relevant date for TUPE transfers from 19 March 2020 back to 28 February 2020 (the date given in the guidance until it was updated on 15 April 2020 to refer to 19 March 2020).
The terms of the Treasury’s Direction, paragraphs 9.1 to 9.3 which still refer to 19 March 2020 as the relevant date, will also need to be amended to give legal force to this change but given the updated guidance for employers on checking eligibility to claim now states that “a new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28 February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.” this should now be a formality.
Support for Employers
If you are an employer and require advice and support on any employment related matter, COVID-19 or otherwise, call us now on 0800 612 4772 or Contact us via our website.
The latest government guidance on the Coronavirus Job Retention Scheme (CJRS) now states that an employee can only be furloughed if the employer and employee have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment”.
For quite some time now the Employers’ CJRS guidancehas stated that any decision to furlough must be made with the agreement of employees and must be confirmed by employers in writing. This wording has not changed in the latest version.
However, what has changedis that the latest government guidance now states that an employee can only be furloughed if “the employer and employee have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment” (para 6.7).
This latest guidance makes it clear that, in addition to written confirmation by an employer, the employee’s agreement to be furloughed must also be recorded in writing; it will not be sufficient to rely on implied consent.
Many employers will have already secured the written agreement of those employees they have furloughed and so will have complied with this latest provision.
However, many employers will have simply confirmed in writing their decision to furlough employees but not sought their express consent, perhaps because there was an express provision in the contract of employment to impose temporary layoffs, and many will have not confirmed anything in writing. For employers who fall into either of these categories, written agreement should be sought as soon as possible in order to qualify for the CJRS grant.
There does not appear to be any requirement for the written agreement to have taken place before an employee is furloughed, so arguably obtaining it after the event is still likely to be sufficient.
Support for Employers
If you are an employer and require a written furlough agreement to ensure you are compliant and eligible to claim the furlough grant, call us now on 0800 612 4772 or Contact us via our website.
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