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20 Nov 2020
by Caroline Harwood

The extended furlough scheme: what we need to know

Employers were largely relieved by the extension of the Coronavirus Job Retention Scheme (CJRS) until the end of March 2021, although they will have to grapple with yet more scheme changes.

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Claims can be made from 1 November 2020 with the online portal available from 11 November. However, before claims are submitted, employers may ask: Are we eligible to claim? Which employees can I furlough? How much can be claimed? What does this mean for other support schemes?

This article takes employers through the answers and practical actions.

Who can claim?

All employers with a UK bank account and UK PAYE scheme can claim. You do not need to have previously used the scheme. However, it is important to note that HMRC will publish employer names, an indication of the value of the claim and, for companies and LLPs, the company registration number for the December period onwards.

Which employees can be furloughed?

To be eligible, employees must have been employed on 30 October 2020 and been part of a PAYE Real Time Information submission between 20 March 2020 and 30 October 2020.

Employees do not have to have previously been furloughed. Employers can furlough any number of employees for any amount of time and any work pattern.

For claim periods starting on/after 1 December, you cannot claim for any days of a contractual or statutory notice period.

How much can be claimed?

Until 31 January 2021, employers can claim 80% of wage costs, but not employer National Insurance contributions or employer pension contributions. This is subject to review in January.

The method to calculate wages for claims for previously eligible employees remains the same as to 31 October.

For employees who are newly eligible for CJRS, claims are based on:

  • fixed salary – salary paid in the pay period ended on/before 30 October 2020 (usually September 2020 salary for monthly paid employees); or
  • variable salary – average pay between the later of 6 April 2020/employment start date, and the day before they were first furloughed from 1 November 2020.

Claims must be reduced for periods the employee is not on furlough and for any hours the employee works.

How to claim

Claims must cover a minimum seven day period and cannot straddle two calendar months. Claims must be submitted within 14 days of the relevant month, unless that falls on a weekend, when the deadline is the next working day.

For example, claims for November 2020 must be submitted by 14 December 2020 and for January 2021 by 15 February 2021.

If an employer under-claims from 1 November, they must amend within 28 calendar days of the end of the claim month (unless this falls on a weekend and then it is the next working day).

Other practical points to note:

  • Employers can save draft claims and resume them within seven days of starting.
  • Claims can be deleted within 72 hours of submission.
  • HMRC may accept a claim made after the relevant deadline if the employer has a reasonable excuse and they claimed without delay after the excuse no longer applied.
  • Previous over-claims can still be corrected through future claims online.

Holiday pay

The government has confirmed that employees should not be placed on furlough for a period simply because they are on holiday. However, employees can take annual leave while on furlough. If they do, leave days should continue to be paid in full.

Where a bank holiday falls inside a worker’s furlough period, and the worker would have usually worked the bank holiday, their furlough will be unaffected.

However, if the furloughed employee would usually have had the bank holiday as annual leave, the bank holiday can be taken as leave and the employee paid in full, or the holiday can be deferred, but the employee should still receive their full holiday entitlement.

What does the CJRS extension mean for other wage support schemes?

The extension of the CJRS has resulted in the government postponing the start of the Job Support Scheme (JSS). The JSS is likely to continue after the CJRS ends on 31 March 2021. However, the government will confirm this nearer the time.

The extension of the CJRS also means that the Job Retention Bonus (JRB) will not be paid in February. The government will redeploy a retention incentive at the appropriate time. Employers who may have included the bonus in their budgets or even made staff retention decisions based on the promise of the bonus have expressed frustration at this decision.

What do employers need to do?

  • Check which employees may be eligible for furlough.
  • Agree revised working hours and changes to employment contracts.
  • Calculate claims.
  • Ensure new deadlines are met.
  • Keep records of the furlough agreement and hours worked for five years.
  • Remember that claims for periods up to 31 October will need to be submitted by 30 November.

The extension of CJRS has provided a vital lifeline to preserve jobs, but subtle changes in the claims process could catch out employers making claims. It is important for employers to keep an eye on the detail and ensure processes are in place to make accurate and timely claims.

To find out more about this article and how Crowe can support you, contact the author, Caroline Harwood, head of share plans and Employment tax at Crowe.