The Prime Minister confirmed on 31 October that a national lockdown would apply in England for a fixed period from 5 November for four weeks and will end on 2 December. Schools, colleges and universities will remain open. Individuals are being encouraged not to leave their homes unless it is for specific reasons such as work or food shopping.
The Chancellor, Rishi Sunak speaking to Parliament on 5 November confirmed that the Coronavirus Job Retention Scheme (CJRS) will now be extended and run from 1 November 2020 until 31 March 2021. The Job Support Scheme due to start on 1 November and Job Retention Bonus have been scrapped.
Although each nation can set their own rules regarding lockdown and other restrictions, the CJRS applies to all four nations of the United Kingdom.
The rules for the extended CJRS are largely the same as before but there are some differences which are listed below. The same rules for flexible furlough will apply as they have done since the scheme was introduced on 1 July 2020.
Employees can be furloughed for a few hours or days and employers claim a grant for a percentage of the cost of furloughed pay. Any worked hours must be paid by the employer and must be at least the NMW/NLW.
Employees that are employed and on the payroll on 30 October 2020 and were included on an RTI submission between 20 March 2020 and 30 October 2020 notifying a payment of earnings will qualify.
This means that single directors who drew earnings in late March can be included.
Leavers & redundancies
Employees employed as of 23 September 2020 who have since been made redundant or have stopped working for the employer can be rehired and furloughed, providing they were included on an RTI submission notifying earnings between 20 March 2020 and 23 September 2020.
Summary of key points
Here is a summary of the changes so far but further guidance will be published on 10 November and a second briefing will be issued.
- Employers can claim even if they have not claimed before. There is no financial test for larger employers, but to qualify the employer must have a UK bank account.
- Employees do not have to have been furloughed previously to qualify.
- Foreign nationals can be put on furlough and you can furlough all categories of visa.
- CJRS will continue to be flexible.
- The grant from 1 November will be 80% of furloughed pay up to a maximum cap of £2,500 per employee per month.
- Employers will have to meet the cost of employer’s secondary NI contributions and pension contributions as before. Employers can top up the 80% if they wish.
- Where employees have been previously furloughed their “pay reference” pay and hours are based on existing furlough calculations. Click here for details.
- Employees who have not been furloughed previously will have a different pay/hours reference period (which may not seem fair in comparison with those previously furloughed). See below for further details.
- Claims for November must be submitted by 14 December and then 14th of each subsequent month thereafter.
- The deadline for claiming the grant is very tight and might pose a problem for some pay frequencies. It is not clear at this time if employers/agents will be allowed to claim an estimated amount and then adjust later.
Calculating furlough pay
Where an employee meets the criteria of the extended CJRS but has not previously been furloughed, there is alternative calculation of the reference pay and usual hours for 80% of pay.
- on a fixed salary – 80% of the wages payable in the last pay period ending on or before 30 October 2020
- whose pay varies – 80% of the average payable between (these dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins.
Meaning of furlough
As under the previous CJRS, during the hours that an employee is recorded as being on furlough, they cannot do any work for their employer which makes money or provides services for their employer or any organisation linked or associated with their employer. The definition of work would include checking emails.
However, employees can:
- take part in training
- volunteer for another employer or organisation
- work for another employer (if their contract of employment allows)
Employees will retain their rights at work, including:
- annual leave
- maternity and other parental rights
- rights against unfair dismissal
- redundancy payments
- to be paid at least statutory National Minimum Wage/National Living Wage for hours worked. Furloughed hours are not hours worked so NMW/NLW does not apply.
Please note there is no change for employees on statutory parental leave.
To be eligible to claim the grant employers must have confirmed with their employees that they have been furloughed or flexibly furloughed. Any agreement made retrospectively that is effective from 1 November 2020 must be in place by 13 November 2020 to be valid.
The Chancellor confirmed that the extended scheme will be reviewed in January 2021 to determine whether employers will be in an economic position to contribute more to the scheme than just the employer’s NI and pension contributions.
Job Retention Bonus
Although the Job Retention Bonus was due to be paid in February 2021 to qualifying employers and has now been scrapped, the Chancellor has indicated that a retention incentive may be paid at the appropriate time.
Claims under the old scheme
Any claims for CJRS relating to the month of October 2020 will fall under the old rules for the scheme which ran up to 31 October. The closing date for claims for October is 30 November 2020.
Claims under the extended scheme
Employers will be able to claim from 8 a.m. on Wednesday 11 November 2020.
Claims can be made:
- in respect of an employee for a minimum 7 day claim window
- in advance
- in arrears for the period from 1 November 2020 to 11 November 2020, from the week commencing 9 November 2020