What are the latest developments?

On 31 October, just before the original CJRS was due to end, the Government announced its extension for a further month and a significant reduction in the employers’ contributions required for normal hours not worked. On 5 November there was a further announcement that the Scheme would be extended until the end of March, with the period of more generous funding extending at least until the end of January 2021. As explained in the policy paper published on 5 November, the launch of the Job Support Scheme “has been postponed because of national developments related to the coronavirus pandemic.” In addition, the eligibility rules have been re-set, so that employers can furlough employees who were added to the payroll since March 2020, or had not previously been furloughed. In the rest of this note, we will refer to these re-set eligibility requirements which apply to the CJRS extension, rather than the rules which applied to the original Scheme. On 17 December, the Chancellor of the Exchequer announced that the Scheme would be extended by a further month, to the end of April 2021. He also confirmed that the more generous level of grants re-introduced in November would be maintained until the end of the Scheme.

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. 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, and were on the payroll on 30 October 2020. The Scheme also extends to non-employee workers paid via PAYE, apprentices and certain office-holders, including directors. Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for.

How is the Government’s contribution calculated?

The Government grant now 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. The existing CJRS calculation of 80% of usual wages and of usual hours will apply to all employees who were eligible under CJRS even if a claim was not made in respect of that employee under CJRS before 31 October 2020. If an employee was not previously eligible for CJRS, the calculation of wages will be based on the wages payable in the last pay period ending on or before 30 October 2020 if the employee has a fixed salary. If pay varies, the calculation will be based the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins. 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, provided that they have previously been furloughed, they can return to work part time on a flexible basis. 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 amount 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 apply from 1 July, employees’ agreement is required where they are returning to work on 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. 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 CJRS claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including 13 November 2020 may be relied on for the purposes of a CJRS claim. 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. After 1 July, under the new more flexible arrangements, there is no longer a minimum period and rotating furlough arrangements will remain 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 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, under the extended Scheme 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?

30 November 2020 was the last day employers could submit or change claims under the original Scheme. Claims relating to November 2020 must have been made by 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month. There will be no gap in eligibility of support between the previously announced end-date of CJRS on 31 October 2020 and the extension of the Scheme starting on 1 November.

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, from December the Government will be publishing the names of employers claiming and the amount they have claimed.

What about the Job Retention Bonus?

This will not be paid in February 2021 as previously planned, since it has been superseded by the extension of the CJRS which will now close at the end of April 2021. The Government has said that “a retention incentive will be deployed at the appropriate time.”

Where can I find out more information?

There are a number of interlocking pieces of guidance, which have all been updated to reflect the extension of the Scheme. The best place to start is the general guidance and then follow the hyperlinks as required. The detailed legal framework for the extended Scheme is set out in a new treasury direction made on 12 November.

Coronavirus Job Retention Scheme: frequently asked questions

Published on 21 December 2020

1 min read

The Scheme has now been extended to the end of April 2021. The launch of the Job Support Scheme, due to replace it on 1 November, has been postponed.

Our FAQs

What are the latest developments?

On 31 October, just before the original CJRS was due to end, the Government announced its extension for a further month and a significant reduction in the employers’ contributions required for normal hours not worked. On 5 November there was a further announcement that the Scheme would be extended until the end of March, with the period of more generous funding extending at least until the end of January 2021.

As explained in the policy paper published on 5 November, the launch of the Job Support Scheme “has been postponed because of national developments related to the coronavirus pandemic.”

In addition, the eligibility rules have been re-set, so that employers can furlough employees who were added to the payroll since March 2020, or had not previously been furloughed. In the rest of this note, we will refer to these re-set eligibility requirements which apply to the CJRS extension, rather than the rules which applied to the original Scheme.

On 17 December, the Chancellor of the Exchequer announced that the Scheme would be extended by a further month, to the end of April 2021. He also confirmed that the more generous level of grants re-introduced in November would be maintained until the end of the Scheme.
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.

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, and were on the payroll on 30 October 2020. The Scheme also extends to non-employee workers paid via PAYE, apprentices and certain office-holders, including directors.

Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for.
How is the Government’s contribution calculated?

The Government grant now 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.

The existing CJRS calculation of 80% of usual wages and of usual hours will apply to all employees who were eligible under CJRS even if a claim was not made in respect of that employee under CJRS before 31 October 2020.

If an employee was not previously eligible for CJRS, the calculation of wages will be based on the wages payable in the last pay period ending on or before 30 October 2020 if the employee has a fixed salary. If pay varies, the calculation will be based the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins.

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. These will be reviewed for the final two months of the Scheme (February and March 2021).

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

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, provided that they have previously been furloughed, they can return to work part time on a flexible basis.

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 amount 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 apply from 1 July, employees’ agreement is required where they are returning to work on 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.

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 CJRS claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including 13 November 2020 may be relied on for the purposes of a CJRS claim.

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.

After 1 July, under the new more flexible arrangements, there is no longer a minimum period and rotating furlough arrangements will remain 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 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, under the extended Scheme 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?

30 November 2020 was the last day employers could submit or change claims under the original Scheme.

Claims relating to November 2020 must have been made by 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month.

There will be no gap in eligibility of support between the previously announced end-date of CJRS on 31 October 2020 and the extension of the Scheme starting on 1 November.
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, from December the Government will be publishing the names of employers claiming and the amount they have claimed.
What about the Job Retention Bonus?

This will not be paid in February 2021 as previously planned, since it has been superseded by the extension of the CJRS which will now close at the end of April 2021.

The Government has said that “a retention incentive will be deployed at the appropriate time.”
Where can I find out more information?

There are a number of interlocking pieces of guidance, which have all been updated to reflect the extension of the Scheme. The best place to start is the general guidance and then follow the hyperlinks as required.

The detailed legal framework for the extended Scheme is set out in a new treasury direction made on 12 November.

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