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The Chancellor Rishi Sunak has just announced the extension of the Coronavirus Job Retention Scheme (CJRS) ‘furlough’ will run through to March 2021, with a review in January 2021. This is aimed at providing comfort to the nation during the public health restrictions which will undoubtedly cause significant disruption to an economy showing signs of recovery following the fallout from the first lockdown. Whilst we are steadying ourselves for a “difficult winter”, the support offered, 80% of the usual wages of the hours not worked, capped at £2,500 per month on a pro rata basis, means employers and employees can agree flexible working patterns to meet demand and manage the quieter weeks and months. The extension means the Job Support Scheme will take a back seat, and the Job Retention Bonus will fall away.

As with any change to employees terms and conditions, an agreement should be reached, and documented. Ideally, employees will receive a letter clearly setting out the new working arrangement, the level of pay, and provide their acceptance of the new terms. As before, clear evidence of hours worked and unworked should be kept in case of any investigation by HMRC. Fraud is most definitely on HMRC’s radar, and keeping precise and accurate records will assist should any claims be queried.

It is understood that as part of the Scheme, those employees made redundant after 23 September 2020 can be rehired and placed back on furlough. This is however not an obligation.

We would hope a fourth Treasury Direction will clarify and provide the finer details. As we understand it, from the guidance to date:

  • All employees, irrespective of the type of contract, will be eligible on the basis they were on an employer’s PAYE payroll by 23:59 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.
  • Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.
  • For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.
  • Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way.
  • When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
  • Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
  • For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
  • Employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
  • The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

Our employment team can assist with queries and communications, and our corporate team is on hand to provide advice in relation to the Business Income Support grant.


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