What do we already know?
At the time of our October Newsletter Coronavirus (COVID-19): End of Furlough and beyond the Coronavirus Job Retention Scheme (CJRS) was due to end on 31 October 2020 and the Government was set to introduce its new financial support package for employers, the Job Support Scheme (JSS), to run from 1 November 2020 until 30 April 2021.
All change! As you are no doubt aware, at the end of October, just hours before the CJRS (furlough scheme) was due to end, the Government announced a national lockdown accompanied by the extension of the CJRS.
Also, the Government announced the suspension of both the Job Support Scheme (JSS) and the Job Retention Bonus. In respect of the Job Retention Bonus, the Government has said: “The Job Retention Bonus (JRB) will not be paid in February 2021 and a retention initiative will be deployed at the appropriate time. The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the CJRS is now being extended to 31 March 2021, the policy intent of the JRB no longer applies.”
Extension to furlough
The CJRS/furlough leave extension runs from 5 November 2020 until end of March 2021. However, employers should note that the Government has said it will review the CJRS in January 2021 to consider whether the economic circumstances are improving enough to ask employers to contribute more. We therefore expect further guidance to be issued in due course if a gradual scaling back of the scheme is proposed.
The Government published information on the extended CJRS in its policy paper of 5 November 2020 (available here) and on 10 November 2020 it published updated guidance on the terms of the extension (it updated several of its documents, but the most relevant are here and here).
The Government also published an updated Treasury Direction on the CJRS on 13 November 2020 (available here) which covers the extension of the CJRS until 31 January 2021. Key points worth noting in the updated Direction include:
- 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”;
- 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 (except for retrospective agreements put in place from 1 to 13 November 2020);
- the Claims may not be made for any day that an employee is serving notice between 1 December 2020 and 31 January 2021 (this is for both statutory and contractual notice periods).
Although much of the guidance aligns with the previous CJRS terms, there are some important points to note about the extended CJRS:
Which organisations can claim under the extended scheme?
All UK employers (including individuals who employ people) which operate a PAYE scheme and have a UK bank account are eligible to make a claim, whether their business remains open or closed. The Government expects that publicly funded organisations will not use the extended scheme, as was the case for the original CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements will continue to apply.
Importantly, employers don’t have to have previously used the CJRS to qualify. This is a significant change to the original CJRS, where the vast majority of employees had to have been furloughed for a period of at least three consecutive weeks ending on or before 30 June to enjoy continued access to the scheme through July to the end of October. There is also no maximum number of employees that an employer can claim for from 1 November 2020.
The Government employer guidance states that employers can furlough employees and apply for a grant “if you cannot maintain your workforce because your operations have been affected by COVID-19”. The employee guidance states that the scheme is designed to help employers whose operations have been severely affected by coronavirus to retain their employees and protect the UK economy. The guidance does not specify what a business would have to do to show they have been severely affected so it seems the wording allows businesses some leeway but is designed to discourage abuse of the system.
Interestingly, the Government has also stated that HMRC will publish details of employers who make claims from December onwards under the extended scheme. This may influence employers in considering whether it is appropriate, from a reputational point of view, to use the extended CJRS.
Which employees are covered?
Employers can claim for employees, on any type of employment contract, who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. The employees do not need to have been previously furloughed.
Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees. Similarly, an employee who was on a fixed term contract, on payroll on 23 September, and that contract expired after 23 September can be re-employed and claimed for, provided that the other eligibility criteria are met.
Other than that, the rules will mirror those under the original full and flexible furlough schemes and employees can be on any type of contract. Further information about the original eligibility requirements is available here.
Calculations determining usual hours and worked hours will broadly follow the same methodology as under the original CJRS. For employees who meet the eligibility criteria and were previously furloughed, employers must use the same calculations for calculating reference pay and usual hours. For those employees who meet the criteria of the extended scheme but were not previously eligible under the CJRS, alternative calculations will need to be used. The various guidance sets out numerous worked examples to assist employers with these calculations.
As with the original scheme, employees cannot undertake any work for their employer during the hours that the employer records them as being on furlough but they can, as previously, take part in training, volunteer for another employer or organisation or work for another employer (if contractually allowed).
Are employees who TUPE transfer to us eligible for furlough?
In relation to TUPE, the guidance confirms that for claim periods after 1 November 2020, a new employer will be eligible to claim for TUPE transferred employees if the TUPE rules apply and the employees being claimed for have transferred to the new employer on or after 1 September 2020, and were employed by either the old or new employer on 30 October 2020, with an RTI submission having been made by either the old or new employer between 20 March and 30 October 2020.
How much can employers claim?
The level of grant under the extended CJRS mirrors levels available to employers under the original CJRS in August 2020. This means that the Government will pay up to 80 per cent of an employee’s normal pay up to a cap of £2,500 and employers will be responsible only for National Insurance Contributions and pension contributions.
As with the original CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
Do staff have to agree to be furloughed under the extended scheme?
The guidance has not changed in this respect and says that “employers should discuss with their staff and make any changes to the employment contract by agreement”. It also says that, in order to be eligible for the grant, employers must write to their employees confirming that they have been furloughed and keep a record of this communication for five years. Further, it states that “the employee does not have to provide a written response”.
Further, the Treasury Direction published on 13 November 2020, makes clear that for the extended CJRS, employers must reach formal agreement with staff “before the start of the furlough claim period to which it relates” (i.e. before they can be furloughed) and that the agreement should be made, or confirmed, in writing by the employer. This can be done by email.
Also, from an employment law perspective, consent is needed in relation to changing the terms of the employment contract, in particular for any reduction in pay. If the employee’s pay is reduced without consent, the business will be at risk of breach of contract claims or unauthorised deduction from wages claims.
In view of the timing of the announcement, the guidance allowed employers to put into place furlough agreements retrospectively to have effect from 1 November 2020, but only up to and including the 13 November 2020.
As with the original CJRS, written records will need to be kept of the agreement for at least five years. However, records of how many hours their employees work and the number of hours they are furloughed should be retained for six years. Given the discrepancy between the two timescales, it would seem prudent to also keep the written records of the furlough agreement for six years.
Can we start a redundancy procedure or put employees on notice of redundancy whilst claiming under the extended CJRS?
For the first month of the extended scheme, from 1 November until 30 November 2020, employers can carry out redundancy consultation and give notice to employees whilst still claiming a grant, as per the previous scheme.
However, importantly, for claim periods starting on or after 1 December 2020, the guidance (here) states that an employer “cannot claim for any days on or after 1 December 2020 during which the furloughed employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation). If an employee subsequently starts a contractual or statutory notice period on a day covered by a previously submitted claim, you will need to make an adjustment”.
The guidance also states that if the employer makes an employee redundant, they should base statutory redundancy and statutory notice pay on the employee’s normal wage rather than the reduced furlough wage.
What about holidays?
There is no change to the position that holiday both accrues, and can be taken, during a period of furlough. However, many employees may not fully understand, or be aware of, their ability to take holiday during furlough.
As a matter of good employment relations practice (and to avoid any potential debate over carry-over) employers should therefore consider reminding employees to take their holiday as soon as possible, particularly if their holiday year is drawing to a close at the end of December 2020. Holiday is payable at the normal rate of remuneration and employers may therefore need to top up furlough pay (if not already doing so) for any holiday days taken.
What about employees who are shielding?
Employees who, following public health guidance, are classed as clinically extremely vulnerable (who were previously advised to shield) can be furloughed and claimed for under the CJRS.
What about employees on family leave?
From 1 November 2020, the rules around furloughing employees returning from any parental related leave (such as maternity, adoption or shared parental leave) have been simplified. From 1 November 2020 the normal scheme rules apply to such employees i.e. they must have been on the payroll at the specified times.
Employees who are on maternity leave who wish to end their maternity leave early in order to be furloughed must give eight weeks’ notice to their employer of their return to work and may not be furloughed until the end of the eight week notice period. If an employee is getting Maternity Allowance while they’re on maternity leave, they should not get furlough pay at the same time.
When can employers start to claim?
Employers are able to claim from 11 November 2020 for claim periods starting on or after 1 November. The Government guidance here contains a link to a calculator to assist employers to calculate their claim.
Although the process for making a claim under the CJRS is the same, there is a shorter claim window.
Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month you’re claiming for. If this time falls on the weekend then claims should be submitted on the next working day. The Government includes the below table in its guidance:
|Claim for furlough days in||Claim must be submitted by|
|November 2020||14 December 2020|
|December 2020||14 January 2021|
|January 2021||15 February 2021|
|February 2021||15 March 2021|
|March 2021||14 April 2021|
Also, employers should note that 30 November 2020 is the last date for submitting claims relating to periods up to and including 31 October 2020.