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Our comprehensive guide to the Coronavirus Job Retention Scheme (CJRS) as at 10th November 2020

changes to the grant contributions

The key facts are:

The CJRS is being extended until 31 March 2021.

The government will review the scheme in January 2021.

30 November 2020 is the last day employers can submit or change claims for periods ended on or before 31 October 2020.

The CJRS will remain open until 31 March 2021. From 1 November 2020 employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.

Employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where they have re-employed an employee after 23 September 2020.

All employers with a UK bank account and UK PAYE schemes can claim the grant.

They do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.

Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.

Employers might need to contribute towards the cost of their furloughed employees’ wages for these periods.

For periods from 1 November 2020, they will need to pay for the cost of employer NICs and pension costs.

See: https://bit.ly/2HnNI4m

Agreeing to furlough employees 

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to this process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the grant, employers must have confirmed with their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. They must:

  • ensure that the agreement is consistent with employment, equality, and discrimination laws
  • keep a written record of the agreement for five years
  • keep records of how many hours employees work and the number of hours they are furloughed (i.e. not working)

Employers can:

  • fully furlough employees – meaning they cannot undertake any work for them while furloughed full time
  • flexibly furlough employees – meaning they can work for any amount of time, and any work pattern, but they cannot do any work for them during hours that employers record them as being on furlough

If employers flexibly furlough employees, they will need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement.

Key points:

  • make sure that the agreement is consistent with employment, equality, and discrimination laws
  • keep a written record of the agreement for five years
  • keep records of how many hours employees work and the number of hours they are furloughed (i.e. not working)

Employers do not need to place all employees on furlough, and they can continue to fully furlough employees if they wish. Employees cannot undertake any work for the business during the time that the employer records them as being on furlough.

Where consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020, will be valid for the purposes of a Coronavirus Job Retention Scheme claim, as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a claim.

Flexible furlough agreements

There is no minimum furlough period and agreed flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once.

Although flexible furlough agreements can last any amount of time, unless otherwise specified, the period that they claim for must be for a minimum claim period of seven calendar days.

Employees are on furlough

As with previous versions of the CJRS, during hours which employers record their employees as being on furlough, they cannot ask them to do any work for the business that:

  • makes money for business / organisation or any organisation linked or associated with the organisation
  • provides services for the business /organisation or any organisation linked or associated with the organisation

The employee can:

  • take part in training
  • volunteer for another employer or organisation
  • work for another employer (if contractually allowed)

Employee taxes and pension contributions

Employees will still pay the taxes they normally pay out of their wages. Employers must deduct and pay to HMRC income tax and employee National Insurance contributions on the full amount that they pay the employee, including any scheme grant.

Employers must also pay to HMRC the employer National Insurance contributions on the full amount that they pay the employee, including any scheme grant.

Employers must report these payments via a Full Payment Submission (FPS) to HMRC on or before the pay date.

Employees will also still pay pension contributions (both employer and automatic contributions from the employee) unless the employee has opted out or stopped saving into their pension.

Keeping employee rights

Employees still have the same rights at work, including:

  • Statutory Sick Pay (SSP)
  • annual leave
  • maternity and other parental rights
  • rights against unfair dismissal
  • redundancy payments

Employers can continue to claim for a furloughed employee who is serving a statutory notice period, however CJRS grants cannot be used to substitute redundancy payments.

Holiday pay

Furloughed employees continue to accrue leave as per their employment contract.

The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

Employees can take holiday whilst on furlough. If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.

Employees should not be placed on furlough for a period simply because they are on holiday for that period. Working Time Regulations (WTR) require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the last 52 working weeks (twelve weeks in Northern Ireland). Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.

Employers will be obliged to pay employees who are on holiday additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given. This applies for both the furlough period and the recovery period.

If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay or give the employee a day of holiday in lieu.

Employees working for a different employer

If contractually allowed, employees are permitted to work for another employer whilst the business has placed them on furlough.

For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete ‘statement C’ on the list.

 If the employee does volunteer work

 A furloughed employee can take part in volunteer work during hours which the employer records them as being on furlough, as long as it is for another employer or organisation.

If the employee does training

Furloughed employees can engage in training during hours which the employer records the employee as being on furlough, as long as in undertaking the training, the employee does not provide services to, or generate revenue for, or on behalf of their business /organisation or a linked or associated organisation.

Where training is undertaken by furloughed employees during hours which the employer records employees as being on furlough, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages (see National Minimum Wage Section below for more details).

Furloughed employees working as union or non-union representatives or as pension trustees

During hours which are recorded as the employee being on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. However, in doing this, they must not provide services to or generate revenue for, or on behalf of the business / organisation or a linked or associated organisation.

During hours where the employee is recorded as being on furlough, employees who are pension scheme trustees or trustee directors of a corporate trustee may undertake trustee duties in relation to the pension scheme. However, a professional, independent pension scheme trustee who has been furloughed by the independent trustee company cannot undertake trustee work that would provide services to or generate revenue for, or on behalf of, the independent trustee company or any organisation linked or associated with that independent trustee company during hours which the employer records them as being on furlough.

Before making a claim

HMRC guidance on the steps to take before calculating a CJRS claim can be seen here: https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme

Before calculating how much the business can claim from the CJRS, agents or employers will need to work out employees’ wages. To do this you must work out:

  • the length of the claim period
  • what can be included when calculating wages
  • the employee’s usual hours and furloughed hours

The length of the claim period

The claim period is made up of the days the employer is claiming a grant for. The start date of the first claim period is the date the first employee was furloughed.

For claim periods starting on or after 1 July 2020, employers can claim for a period of less than seven days if they are claiming for the first few days or the last few days in a month. Employers can only claim for a period of fewer than 7 days if the period they are claiming for includes either the first or last day of the calendar month, and the employer has already claimed for the period ending immediately before it.

Employers should match claim periods to the dates they process their payroll, if possible.

Only one claim can be made for any period so this must include all furloughed or flexibly furloughed employees in the claim even if they are paid at different times.

If employers make more than one claim, their subsequent claims cannot overlap with any other claim made. Where employees have been furloughed or flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates.

Employers can claim before, during or after they process the payroll as long as the claim is submitted by the relevant claim deadline. However, when claiming for employees who are flexibly furloughed, employers should not claim until they are sure of the exact number of hours they will have worked during the claim period. This means that employers should only claim when they have certainty about the number of hours employees are working during the claim period.

If the pay period being claimed for includes days in more than one month

Claim periods starting on or after 1 July 2020 must start and end within the same calendar month. For these months, if the pay period includes days in more than one month, employers will need to submit separate claims covering the days that fall into each month. Each of the claims should be calculated separately.

Claim periods cannot overlap, so employers will need to make sure they include all of the employees they want to claim for in each claim they make.

The content in this page is correct as at 20/11/2020. See terms and conditions.

Bryant House - Friend and Grant Chartered Acocuntants and Tax Advisors

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