Leigh Thurston, from Lovewell Blake, explains how the updated CJRS rules apply
The government has confirmed that the Coronavirus Job Retention Scheme, otherwise known as the furlough scheme, has been extended until the end of April 2021.
How will it work?
For claim periods between November 2020 and April 2021, employees will receive 80 per cent of their usual salary for any unworked hours. The maximum grant per employee per month is £2,500 (Equivalent to full earnings of £3,125 per month), and this cap is proportional to the hours not worked.
The employer will not need to make any contribution to the employees unworked wages – the full 80 per cent is covered by the grant. The employer can ‘top up’ an employee to any amount if they wish.
The grant does not cover any Class 1 Employer’s National Insurance or Employer’s Pension Contributions due, so employers are still liable for these costs.
Which employees qualify?
As per the previous announcement of the CJRS extension, employers can claim for employees who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
Employers will have flexibility to use the scheme for employees for any amount of time or shift pattern, furloughing employees on either a full-time or part-time basis, and will be able to vary the hours worked in agreement with the employee.
As under the current CJRS rules, employees can be on any type of employment contract.
An employee does not have to have been furloughed under the CJRS previously for qualify.
How are ‘usual hours’ and ‘reference salary’ calculated?
For employees who have been previously furloughed, these calculations have not changed. For those who have not previously been furloughed:
Reference salary –
- Fixed salary: 80 per cent of the wages payable in the last pay period ending on or before 30 October 2020
- Varied wages: 80 per cent 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
Usual hours –
Fixed hours: Usual hours for an employee who is contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work, will be the contracted hours worked in the last pay period ending on or before 30 October 2020.
Varied hours: The usual hours will be the average hours worked between (these dates are inclusive):
- the start date of the 2020 to 2021 tax year (for example, 6 April 2020)
- the day before their CJRS extension furlough periods begins.
How do the claims work, when can I make a claim and what are the deadlines?
As has been the case since July, claims can only be made on a calendar month basis and cannot overlap each other. For example, if your pay period ran between 6th November and 5th December and you wished to make a CJRS claim in relation to this whole period, it needed to be calculated and claimed in two parts – one for the 6th – 30th November, and one for 1st – 5th December.
Claims can be made:
- in respect of an employee for a minimum seven-day claim window
- in advance
- in arrears for the period from 1 November 2020 to 11 November 2020.
Claims relating to November 2020 had to be made before 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month.