Following the Government’s announcement of the extension of the Coronavirus Job Retention Scheme (“Extended Scheme”) until 31 March 2021, updated guidance and a further Treasury Direction have now been published.
We summarise the key changes for employers. Employers should note that the updated guidance clarifies that the previous scheme rules will apply to the Extended Scheme unless expressly altered by the updated guidance.
Employers are eligible to use the Extended Scheme if they have a PAYE scheme that is registered on HMRC’s real time information (“RTI”) system for PAYE on or before 30 October 2020 and remain so registered at the time of submitting the claim.
There is no requirement for an employee to have been previously furloughed to be eligible under the Extended Scheme. However, to be eligible:
- an employee must have been employed and on the employer’s PAYE on 30 October 2020; and
- the employer must have made an RTI submission to HMRC in respect of that employee between 20 March 2020 and 30 October 2020.
Where an employee has left or been made redundant on or after 23 September 2020 an employer can re-hire the employee and place them onto furlough so that the employer can claim for them under the Extended Scheme (although the employer is under no obligation to do so). Employees who were on fixed term contracts that expired on or after 23 September 2020 can also be rehired and placed onto furlough.
Employees who have transferred to a new employer under TUPE are eligible to be furloughed and claimed for under the Extended Scheme by the new employer if they:
- transferred from their old employer to their new employer on or after 1 September 2020;
- are employed by either their old employer or new employer on 30 October 2020; and
- are on a PAYE RTI submission to HMRC, by their old or new employer between 20 March 2020 and 30 October 2020.
Note that the deadline for retrospectively furloughing an employee under the Extended Scheme with effect from 1 November 2020 was 13 November 2020. Whilst employees are still able to be placed onto furlough at any point going forward, furlough agreements must now be in place before the start of the relevant furlough period for employers to use the Extended Scheme.
Employees can be furloughed if they are shielding in line with public health guidance (or need to stay at home with someone who is) or have caring responsibilities resulting from Coronavirus such as childcare.
The updated guidance emphasises that the Extended Scheme is not intended for short-term absences from work due to sickness or self-isolating. For employees on long-term sick leave, it is up to employers to decide whether to furlough such employees. If an employee becomes sick while furloughed the employer can choose to move those employees on to Statutory Sick Pay (SSP) or keep them on furlough, at their furloughed rate.
Prior to 1 December 2020, employers are eligible to claim for employees serving a period of statutory notice under the Extended Scheme, although as before, the grant received by employers under the Extended Scheme cannot be used for redundancy payments. The employer guidance is, however, silent as to whether employers can claim for employee’s serving contractual notice but this missing clarity in the guidance appears not to be intentional on the basis that the employee guidance references claiming for employees serving both statutory and contractual notice. What is more important is the change which has been announced from December. Employers will be unable to claim for employees who are serving a contractual or statutory notice period (including those retiring or resigning) on or after 1 December 2020. Employers should make sure they factor this into any decision to re-hire employees or extend notice periods during the lifetime of the Extended Scheme.
Employees on an unpaid sabbatical or other unpaid leave are not eligible to be claimed for under the Extended Scheme if the period of unpaid leave falls between 1 November 2020 – 31 January 2021.
Employees can be furloughed either on a full-time basis or flexibly.
Any hours an employee spends working should be paid for at their normal rate of pay including tax, national insurance contributions and pension contributions on such amounts.
As with previous versions of the Scheme, employers will be able to claim up to 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. Employers will only be required to contribute towards the tax, national insurance and pension contributions. The guidance highlights that the extent of the employer liability will be reviewed in January 2021 to see whether it is appropriate for employers to contribute more towards employee’s wages under the Scheme for the final two months. Again, employers should bear this in mind when considering whether to agree to furlough employees to the end of the Extended Scheme.
The relevant reference period for claims is either:
- the last pay period ending on or before 19 March 2020 for employees who were previously eligible under the Scheme e.g. they were on payroll prior to 19 March 2020; or
- for those employees not previously eligible under the Scheme the last pay period ending on or before 30 October 2020 e.g. hired between 20 March 2020 and 30 October 2020.
For those employees previously eligible, previous calculations of 80% of usual wages and usual hours under the Extended Scheme apply – even if a claim was not made in respect of that employee prior to 31 October 2020.
For employees not previously eligible (that is, those employed on or after 20 March 2020) the calculations will be as follows:
- for employees on a fixed salary 80% of wages payable in the last pay period ending on or before 30 October 2020; or
- for employees with a pay that varies 80% of the average pay received between their start date or 6 April 2020 (whichever is later) and the day before their period of furlough under the extended Scheme begins.
Usual hours calculations for employees not previously eligible will be as follows:
- for employees with fixed hours and pay does not vary according to hours worked their usual hours will be their contracted hours worked in the last pay period ending on or before 30 October 2020; or
- for employees who work variable hours, their usual hours will be the average hours worked between the start date of 2020 – 2021 tax year and the day before their period of furlough under the Extended Scheme begins.
Claims must be made in respect of a minimum of 7 consecutive calendar days expect where there is a period of less than 6 consecutive days at the beginning or end of the calendar month, known as an orphan period. Claims must also start and end in the same calendar month.
Making a claim
Claims for claim periods up to 31 October 2020 will not be accepted after 30 November 2020.
For claims after 1 November 2020, there is no limit on the number of employees that can be claimed for.
Employers should note that there are now monthly deadlines for claims, which expire 14 days after the month claimed for (or, where this falls on a weekend, the next working day). Claims must be submitted by 11:59 PM on the following days:
- November claims: 14 December 2020;
- December claims: 14 January 2021;
- January claims: 15 February 2021.
To make changes to a claim that has been submitted since 1 November 2020, employers will have 28 days from the month claimed for to submit any increase in the amount claimed to HMRC. Any changes to claims must be submitted by:
- November claims: 29 December 2020;
- December claims: 28 January 2021;
- January claims: 1 March 2021
Employers must continue to keep written records of furlough agreements and written confirmation that employees have been placed onto furlough for five years. Records of how many hours an employee has worked and how many hours the employee has spent furloughed must be kept for six years.
Naming of employers
It has now been made a condition of claiming under the Extended Scheme that HMRC will be publishing details of employers who use the Extended Scheme from 1 December 2020 and HMRC will provide a “reasonable indication” of the amount claimed. The only exception to this is where employers can show that publication would expose the employer including any director, officer, employee, partner, member or trustee to a serious risk of violence or intimidation (including any individual living with any of the preceding). These details will be published during either of the following claim periods or within 3 months beginning with the end of the calendar month in which the claim relates. This information will be removed 1 year after it was first published.
Other support schemes
The Government have announced that the Job Support Scheme and the Coronavirus Job Retention Bonus have been placed on hold. The Coronavirus Job Retention Bonus will be replaced with a similar retention incentive at the appropriate time – which is likely to be following the end of the extended Scheme.