24 Nov 2020
Chancellor Rishi Sunak has once again extended the duration of the Coronavirus Job Retention Scheme (CJRS), often referred to as the furlough scheme. As part of the package of support measures that were introduced because of a second national lockdown for England it was extended for the planned duration. The Chancellor recently announced that the CJRS will be extended to the end of March.
As a result of the extension of CJRS, neither the Job Support Scheme, nor the Job Retention Bonus Scheme (JRBS), will be implemented as planned.
Extended CJRS – government support
Under the extended CJRS the government will cover 80% of the cost of employee usual wages for hours not worked, up to a maximum of £2,500 per month. The £2,500 cap is proportional to the hours not worked. Employers will have to fund the employer National Insurance and mandatory auto enrolment employer pension contributions. Employers can top up employee wages above the maximum salary threshold at their own expense.
Employers will also have to pay the employee's wages for the hours they work as normal, as well as employer National Insurance and employer pension contributions.
This policy will be reviewed in January to decide whether economic circumstances are improving enough to ask employers to contribute more.
The rules applying to CJRS are set to remain as they did previously, except where specifically indicated. In particular, the need to maintain employee rights and ensure employees have agreed to furlough arrangements is emphasised. Retrospective agreements can (subject to employment law) be made for the purposes of a CJRS claim with effect from 1 November 2020 provided they were put in place before 14 November 2020.
However, the announcement includes two important changes. Firstly, there is no requirement for the employer to have used the CJRS previously.
Secondly, employers can claim for employees who were employed and on their PAYE payroll on 30 October 2020 for whom at least one PAYE Real Time Information (RTI) submission has been made between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
When can a claim be made?
The extended CJRS will operate as the previous scheme did, with businesses being able to claim either shortly before, during or after running payroll. Businesses have been able to claim from 8am on Wednesday 11 November. Claims made for November must be submitted to HMRC by no later than 14 December 2020.
Claims relating to each subsequent month should be submitted by day 14 of the following month to ensure prompt claims following the end of the month which is the subject of the claim.
Which employees can be put on the CJRS?
Employers can claim for employees on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed.
For claim periods ending on or before 31 October 2020, employers can claim if they have employees on fixed term contracts. In these instances, the normal eligibility rules apply.
However, for claim periods after 1 November 2020, if an employee's fixed term contract has not already expired, it can be renewed or extended. Employers can put employees on the CJRS if they were employed on or before 30 October 2020. Employers are required to have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020.
Employees whose fixed term contracts expired on or after 23 September 2020 can be re-employed and claimed for under the CJRS. This only applies if an employee was employed by the employer on 23 September and a PAYE RTI submission was made to HMRC between 20 March 2020 and 30 October 2020.
Employers can put apprentices on the CJRS, and they are permitted to continue to train whilst on furlough.
Reporting employees' wages
Employers who have claimed a grant through the CJRS are encouraged to check if they need to report payments on the PAYE RTI system. This will depend on whether they are using the grant to pay wages or reimburse wages that they have already paid.
Employers must deduct income tax and employee NICs on the full amounts they pay their employees. This includes any scheme grant. Employers must also pay HMRC the employer NICs on the full amounts that are paid to employees. These payments must be reported via a Full Payment Submission (FPS) to HMRC on or before the pay date.
Further information can be found here.
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