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The government scheme announced a six month extension of the Coronavirus Job Retention Scheme (CJRS Extension) commencing on 1 November 2020. The extension will provide government support for 80% of the regular wage or salary of furloughed employees on a “flexible furloughing” basis to a maximum of £2,500 per month. The government will review the level of support in January 2021.
There are a number of key changes which apply to the CJRS Extension.
The government also announced important deadlines for CJRS claims for periods to 31 October.
Details of the CJRS Extension and the impact on the scheme to 31 October 2020 are examined below:
Examples of the calculations which apply to the flexible furloughing and CJRS Extension are provided here .
We will be pleased to answer any queries you may have on any of the matters on the flexible furlough CJRS and the CJRS Extension – please email your query to Grazyna.baldwin@wsm.co.uk
What is CJRS?
CJRS provides a government grant to reimburse employers which make a claim for furloughed employees – those employees who have had a forced temporary suspension of employment.
The government introduced the initial CJRS for periods from 1 March – 30 June 2020 to provide support for employees who were furloughed full time for periods of at least three consecutive weeks. The initial scheme provided grants for 80% of the employees’ normal wage or salary and the related employers National Insurance Contributions (NIC) and employer auto-enrolment pension commitments.
Details on the initial CJRS are available here.
The CJRS was revised from 1 July 2020 to allow for “flexible furloughing” of employees which allowed CJRS support to be provided for those periods for which an employee was not working regardless of length of the furlough periods.
Only those employees for whom a claim had been made under the initial CJRS were eligible for a claim under the flexible furloughing CJRS.
The flexible furloughing CJRS also introduced reducing levels of government grant and increasing contributions required from employers for each month through to 31 October 2020. The employees still received 80% of their normal wage or salary. The employer was required to pay employers NIC and pension commitments for the months of August-October and to top up the employees wage/salary by 10% in September and 20% in October as the government grant reduced.
CJRS claims for government grant for periods up to 31 October have to be made by 30 November 2020 after which date no applications will be accepted.
More details of the flexible furloughing CJRS are available here.
The CJRS Extension came into effect from 1 November 2020 and adopts flexible furloughing arrangement with the government grant restored to 80% of the employees normal wage or salary for the time they are not working. The employer is required to pay employers NIC and pension commitments on the CJRS grant.
A key change to the CJRS Extension is that claims can be made for any
employee who is subject to flexible furloughing – the requirement for a previous claim to have been made for that employee has been removed. The CJRS Extension also makes several changes to the flexible furloughing scheme as to how the claim is calculated and the date by which it has to be submitted.
What changes have been made under the CJRS Extension?
The main changes made under the CJRS Extension are:
Claims can be made for any employees which have been furloughed (no previous CJRS claim needs to have been made for the employee).
Employers which were not eligible to make claims prior to 31 October 2020 may be eligible to claim under CJRS Extension.
The reference period for calculation of the normal wage or salary of the employee changes if a previous CJRS claim has not been made and the employee has only recently been engaged.
The amount claimed is reset at the levels available under the flexible furlough scheme for the month of August.
Claims for each month have to be submitted to short deadlines.
Eligible employees
Claims for a period that starts on or after 1 November 2020 can only be made for furloughed employees that were employed and on payroll on 30 October 2020. This means 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 that employee.
If you have an employee who was on furlough but then made redundant a claim can be made under the CJRS Extension provided the employee:
A CJRS Extension claim can be made for employees who are serving a contractual or statutory notice period however the government is reviewing whether to change the approach for claim periods starting on or after 1 December 2020 – further guidance published in late November. Note CJRS Extension grants cannot be used to substitute redundancy payments.
To qualify for the CJRS Extension, employers must discuss being furloughed or flexibly furloughed with their employees and make any relevant changes to their contract of employment by agreement. A written record of the agreement must be retained for a minimum of five years, along with records of the hours an employee has worked and furloughed hours, which must be kept for a minimum of six years. There is no requirement for employees to provide a written response to the written record of the agreement. Agreements with employees which took effect from 1 November 2020 will only be valid if made on or before 13 November 2020.
Eligible employers
The requirement for an eligible employer to have a UK bank account and UK PAYE scheme is unchanged however to be eligible to make a claim for a period prior to 31 October 2020 a Real Time Information (RTI) Full Payment Submission (FPS) must have been made on or before 19 March 2020 and the PAYE scheme must have been registered before this date.
To be eligible for a claim under the CJRS Extension for periods from 1 November 2020 a PAYE RTI FPS must have been made to HMRC between 20 March 2020 and 30 October 2020 for an eligible employee. The PAYE scheme must have been registered and a submission made before 30 October 2020.
A new employer may also be eligible to claim under the CJRS Extension for employees of a previous business transferred if the Transfer of Undertaking Protection of Employment (TUPE) provisions or PAYE business succession rules apply to the change in ownership. To be eligible the employees for which a claim is made should have been:
Normal wage or salary basis period
The reference period for the calculation of the normal wage or salary of an employee is the last pay period ending on or before 19 March 2020 for employees who either:
For all other employees, the reference period is the last pay period ending on or before 30 October 2020. Note this is not 31 October so for those employees paid at the calendar month end the reference period will be that ended 30 September 2020.
Claims for employees who were not on the payroll on 19 March 2020 can only be made for periods starting after 1 November 2020.
Amount claimed
The government grant will be 80% of the normal wages or salary of the employee wages up to a cap of £2,500 (which is equivalent to a maximum normal wages or salary of £3,250 per month) and employers will pay the employers NIC and auto-enrolment pension contributions.
The claim under CJRS Extension is similar to that which applied for the month of August under the flexible furlough CJRS.
Employers have to pay employees for the hours they work and can choose to top up their wages or salary above the amount of the CJRS Extension grant for the hours not worked at their own expense if they wish.
Claim submission deadlines
Deadlines for CJRS Extension grant claims apply for each month of the scheme.
Claims for furlough periods in a calendar month – regardless of the pay period to which it applies – must be submitted by 23:59 on the dates set out below:
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
Claims can be made before, during or after the processing of the payroll as long as the claim is submitted by the claim deadline. Claims can be made up to 14 days before the end date of the claim period. Advance claims present particular problems for employees who are flexibly furloughed as the employer will need to be sure of the exact number of hours the employee will have worked during the claim period.
If an error is made resulting in an underclaim the employer will still need to make sure the employees are paid the correct amount. For claims relating to periods after 1 November 2020, employers will only be able to increase the amount of a claim if the claim is amended within 28 calendar days after the month to which the claim relates as set out in the table below – please note this applies to amendments and the initial claim for the month must be submitted by the above deadline dates.
Furlough days in Amended furlough days must be submitted by
November 2020 29 December 2020 December 2020 28 January 2021 January 2021 1 March 2021 February 2021 29 March 2021 March 2021 28 April 2021
HMRC may accept a claim made after the relevant deadline if the employer had a reasonable excuse for failing to make a claim in time and then claimed without delay after the excuse no longer applied. HMRC will not consider reasonable excuses in advance of a claim deadline.
What remains the same with the CJRS Extension?
Many of the arrangements in place under the flexible furlough CJRS will continue to apply under the CJRS Extension including:
What are the deadlines which apply to the CJRS scheme which ended on 31 October?
All claims for the flexible furlough CJRS for any period between 1 July 2020 and 31 October 2020 must be submitted to HMRC by 23:59 on 30 November 2020.
Amendments to claims for any error made resulting in an underclaim by the employer for any period of furlough up to and including 31 October 2020 must also be submitted to HMRC by 23:59 on 30 November 2020.
Examples of the calculations which apply to the flexible furloughing and CJRS Extension are provided here.
Amanda graduated from Brunel University, with a joint honours degree, achieving a BSC and BA degree in Leisure Management and Television and film studies. Amanda started her career in a customer service role before joining the hotel group Le Meridien as an Events coordinator, she was in the hotel industry for seven years and during her time won an award from a major international airline for her outstanding attitude and dedication to customer service, which she achieved while working for the Rezidor hotel group in the position of Airline Crew Manager. Amanda has over 20 years experience in customer relations and event management.
