What are the latest developments?

On 3 March, as part of his budget announcements, the Chancellor confirmed that the Scheme would continue until the end of September 2021. Employers will be asked to contribute 10% of normal salary for hours not worked from July, rising to 20% for August and September. A seventh treasury direction was published on 15 April, setting out the detailed rules for what we believe will be the final five months of the Scheme, from 1 May to 30 September 2021.

Who is eligible to claim?

Employers across the UK can claim, whether their businesses are open or closed. Employers do not need to have used the CJRS previously. However, to claim for the final five months of the Scheme, they must have a PAYE scheme registered on HMRC’s Real Time Information system for PAYE by 2 March 2021 The Government expects that publicly funded organisations will not use the scheme, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other CJRS eligibility requirements also apply to these employers. Employers should only furlough staff if their activities have been adversely affected by the coronavirus or the measures taken to limit its transmission.

What employees can be furloughed?

Both full-time and part-time employees can be included in the Scheme, regardless of the type of contract, as long as they are paid via PAYE. The Scheme also extends to non-employee workers paid via PAYE, apprentices and certain office-holders, including directors. For claim periods between 1 November 2020 and 30 April 2021, the individual claimed for must have been employed and on the payroll by 30 October 2020. From May 1 onwards, the relevant date is 2 March 2021. There is no requirement that any such employee must have been previously furloughed.

How is the Government’s contribution calculated?

The Government grant currently covers the lower of 80% of an employee’s regular wage or £2,500 per month for usual hours not worked. Employers must meet Employer National Insurance contributions and employer pension contributions on that subsidised wage. Compulsory commission can be included, but discretionary commission and bonuses must be excluded. An employer can choose to top up the employee’s wages beyond this contribution, but is not obliged to do so.

How does flexible furloughing work?

Since 1 July it has no longer been a requirement that furloughed staff do no work at all for their employer. Instead, they can work reduced hours, and their employer can furlough them for the remainder of their normal working hours. Such staff must be paid their contractual wages for the hours they work, and employers can make a claim for the balance of their normal wages under the Scheme for the additional hours they would normally have worked. The maximum amount of the grant will be reduced proportionately, according to the relationship between the hours worked and the remaining normal hours spent on furlough. Subject to some exceptions, an employer was not be able to make a claim between 1 July and 31 October for a greater number of employees than the highest number it included in any one claim made prior to 1 July. This cap does not apply to claims for periods from 1 November onwards.

What records do I need to keep?

The Guidance stipulates that employers must have confirmed to their employees in writing that they have been furloughed. Employers must also keep records of how each claim is calculated. These records must be kept for six years. For claims under the flexible furlough arrangements, this will need to include details of the hours actually worked, the normal working hours for the relevant claim period, and written confirmation of the agreement reached on the new working arrangements.

Must employees agree to be furloughed?

In most cases, employees’ agreement was required before they were first furloughed, since the arrangements would have normally amounted to a variation of their employment contracts, for which their consent was required. It was also prudent to obtain their agreement to ensure compliance with the rules of the original Scheme. Under the terms of the revised Scheme which have applied from 1 July, employees’ agreement is required where they are working reduced hours, and remaining on furlough for the remainder of their normal working hours, though this can achieved via a collective agreement. In most cases, this will in any event be required as a matter of contract. It is important to realise that no features of the Scheme override the normal principles of employment law, or the requirements of the collective consultation regime.

Is there a minimum period of furlough?

The minimum period for which an employee could be furloughed under the original Scheme was three weeks. It was permissible to furlough employees multiple times, making it possible to rotate periods of furlough among different groups of staff. Since 1 July, under the new more flexible arrangements, there has no longer been a minimum period and rotating furlough arrangements remaining permissible. However, the minimum period for which a claim can be made is a week. The claim period must start and end within the same calendar month: if the pay period includes days in more than one month, separate claims will need to be submitted covering the days that fall into each month.

What about employees on sick leave?

The Guidance says that employees should not be placed on furlough merely because they are on short-term sick leave, or self-isolating. But they can be furloughed if there are business reasons for doing so. However, employers cannot claim both the two week coronavirus Statutory Sick Pay rebate and the furlough grant in respect of the same period of absence. If an employee becomes ill while on furlough, the Guidance says that “it is up to employers to decide whether to move these employees onto Statutory Sick Pay or to keep them on furlough, at their furloughed rate.”

Can staff be made redundant while on furlough?

Provided that the employee continues to be eligible for the Scheme, there is no reason in principle why a redundancy process cannot be carried out while they are on furlough. That is a consequence of the general rule that the Scheme does not over-ride any feature of employment law, including the rules governing redundancies. The Guidance was amended on 17 July 2020 to clarify that the grant could continue to be claimed for periods of contractual well as statutory notice. However employers must bear the full cost of redundancy payments, which should be calculated on pre-furlough wages. However, this approach has been changed from 1 December onwards. From that point, no claim can be made in respect of an employee for periods during which they are under notice of termination of their employment, whether this is because of redundancy or for other reasons.

What is the deadline for making claims?

Claims for each calendar month should be submitted no later than 14 calendar days after the end of that month. If this deadline falls on the weekend or a bank holiday, the claim can be made on the next working day.

What are the penalties for over-claiming?

Employers are encouraged to identify and pay back any over-payments as soon as possible. Under powers conferred on HMRC under the 2020 Finance Act, a penalty of up to 100% of the overpayment may be levied if the employer has not notified or repaid the amount over-claimed within 90 days of its receipt. As an additional incentive to encourage compliance, the Government has published the names of employers claiming and the amount they have claimed.

What about the Job Retention Bonus?

This was not paid in February 2021 as previously planned, since it had been superseded by the extension of the CJRS. When the withdrawal of the bonus was announced, the Government said “a retention incentive will be deployed at the appropriate time.” However, there were no further announcements about this in the March 2021 budget.

Where can I find out more information?

There are a number of interlocking pieces of guidance, which are regularly updated. The best place to start is the general guidance and then follow the hyperlinks as required. The detailed legal framework for the Scheme up to the end of April 2021 is set out in a treasury direction made on 12 November, as amended by a sixth treasury direction which covers the three months to April 2021. A seventh treasury direction was published on 15 April to cover the further extension of the Scheme to the end of September 2021.

Coronavirus Job Retention Scheme: frequently asked questions

Published on 21 April 2021

1 min read

The Government announced in its March budget that the Scheme will continue until the end of September 2021. Employer contributions will start to increase from July onwards.

Our FAQs

What are the latest developments?

On 3 March, as part of his budget announcements, the Chancellor confirmed that the Scheme would continue until the end of September 2021. Employers will be asked to contribute 10% of normal salary for hours not worked from July, rising to 20% for August and September.

A seventh treasury direction was published on 15 April, setting out the detailed rules for what we believe will be the final five months of the Scheme, from 1 May to 30 September 2021.
Who is eligible to claim?

Employers across the UK can claim, whether their businesses are open or closed. Employers do not need to have used the CJRS previously. However, to claim for the final five months of the Scheme, they must have a PAYE scheme registered on HMRC’s Real Time Information system for PAYE by 2 March 2021

The Government expects that publicly funded organisations will not use the scheme, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other CJRS eligibility requirements also apply to these employers.

Employers should only furlough staff if their activities have been adversely affected by the coronavirus or the measures taken to limit its transmission.
What employees can be furloughed?

Both full-time and part-time employees can be included in the Scheme, regardless of the type of contract, as long as they are paid via PAYE. The Scheme also extends to non-employee workers paid via PAYE, apprentices and certain office-holders, including directors.

For claim periods between 1 November 2020 and 30 April 2021, the individual claimed for must have been employed and on the payroll by 30 October 2020. From May 1 onwards, the relevant date is 2 March 2021. There is no requirement that any such employee must have been previously furloughed.
How is the Government’s contribution calculated?

The Government grant currently covers the lower of 80% of an employee’s regular wage or £2,500 per month for usual hours not worked. Employers must meet Employer National Insurance contributions and employer pension contributions on that subsidised wage. Compulsory commission can be included, but discretionary commission and bonuses must be excluded.

An employer can choose to top up the employee’s wages beyond this contribution, but is not obliged to do so.

What do employers have to contribute?

The table below sets out the minimum employers’ contributions required.

Furloughed employees’ entitlement will remain at 80% of their normal wages (up to a cap of £2,500 per month) for their normal hours when they are not working.

Month	Government contribution	Employer contribution
November 2020 - June 2021	80% of wages only (no grant for employer national insurance and minimum pension contributions)	Employer NI and pension contributions only
July 2021	70% of wages (capped at £2187.50)	10% of wage costs (capped at £312.50) plus NI and pension contributions
August - September 2021	60% of wages (capped at (£1875)	20% of wage costs (capped at £625) plus NI and pension contributions

How does flexible furloughing work?

Since 1 July it has no longer been a requirement that furloughed staff do no work at all for their employer. Instead, they can work reduced hours, and their employer can furlough them for the remainder of their normal working hours.

Such staff must be paid their contractual wages for the hours they work, and employers can make a claim for the balance of their normal wages under the Scheme for the additional hours they would normally have worked. The maximum amount of the grant will be reduced proportionately, according to the relationship between the hours worked and the remaining normal hours spent on furlough.

Subject to some exceptions, an employer was not be able to make a claim between 1 July and 31 October for a greater number of employees than the highest number it included in any one claim made prior to 1 July. This cap does not apply to claims for periods from 1 November onwards.
What records do I need to keep?

The Guidance stipulates that employers must have confirmed to their employees in writing that they have been furloughed. Employers must also keep records of how each claim is calculated. These records must be kept for six years.

For claims under the flexible furlough arrangements, this will need to include details of the hours actually worked, the normal working hours for the relevant claim period, and written confirmation of the agreement reached on the new working arrangements.
Must employees agree to be furloughed?

In most cases, employees’ agreement was required before they were first furloughed, since the arrangements would have normally amounted to a variation of their employment contracts, for which their consent was required. It was also prudent to obtain their agreement to ensure compliance with the rules of the original Scheme.

Under the terms of the revised Scheme which have applied from 1 July, employees’ agreement is required where they are working reduced hours, and remaining on furlough for the remainder of their normal working hours, though this can achieved via a collective agreement. In most cases, this will in any event be required as a matter of contract.

It is important to realise that no features of the Scheme override the normal principles of employment law, or the requirements of the collective consultation regime.
Is there a minimum period of furlough?

The minimum period for which an employee could be furloughed under the original Scheme was three weeks. It was permissible to furlough employees multiple times, making it possible to rotate periods of furlough among different groups of staff.

Since 1 July, under the new more flexible arrangements, there has no longer been a minimum period and rotating furlough arrangements remaining permissible. However, the minimum period for which a claim can be made is a week.

The claim period must start and end within the same calendar month: if the pay period includes days in more than one month, separate claims will need to be submitted covering the days that fall into each month.
What about employees on sick leave?

The Guidance says that employees should not be placed on furlough merely because they are on short-term sick leave, or self-isolating. But they can be furloughed if there are business reasons for doing so. However, employers cannot claim both the two week coronavirus Statutory Sick Pay rebate and the furlough grant in respect of the same period of absence.

If an employee becomes ill while on furlough, the Guidance says that “it is up to employers to decide whether to move these employees onto Statutory Sick Pay or to keep them on furlough, at their furloughed rate.”
Can staff be made redundant while on furlough?

Provided that the employee continues to be eligible for the Scheme, there is no reason in principle why a redundancy process cannot be carried out while they are on furlough. That is a consequence of the general rule that the Scheme does not over-ride any feature of employment law, including the rules governing redundancies. The Guidance was amended on 17 July 2020 to clarify that the grant could continue to be claimed for periods of contractual well as statutory notice. However employers must bear the full cost of redundancy payments, which should be calculated on pre-furlough wages.

However, this approach has been changed from 1 December onwards. From that point, no claim can be made in respect of an employee for periods during which they are under notice of termination of their employment, whether this is because of redundancy or for other reasons.
What is the deadline for making claims?

Claims for each calendar month should be submitted no later than 14 calendar days after the end of that month. If this deadline falls on the weekend or a bank holiday, the claim can be made on the next working day.
What are the penalties for over-claiming?

Employers are encouraged to identify and pay back any over-payments as soon as possible. Under powers conferred on HMRC under the 2020 Finance Act, a penalty of up to 100% of the overpayment may be levied if the employer has not notified or repaid the amount over-claimed within 90 days of its receipt.

As an additional incentive to encourage compliance, the Government has published the names of employers claiming and the amount they have claimed.
What about the Job Retention Bonus?

This was not paid in February 2021 as previously planned, since it had been superseded by the extension of the CJRS.

When the withdrawal of the bonus was announced, the Government said “a retention incentive will be deployed at the appropriate time.” However, there were no further announcements about this in the March 2021 budget.
Where can I find out more information?

There are a number of interlocking pieces of guidance, which are regularly updated. The best place to start is the general guidance and then follow the hyperlinks as required.

The detailed legal framework for the Scheme up to the end of April 2021 is set out in a treasury direction made on 12 November, as amended by a sixth treasury direction which covers the three months to April 2021. A seventh treasury direction was published on 15 April to cover the further extension of the Scheme to the end of September 2021.

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