On 31st of October 2020, as a result of Lockdown 2, the Coronavirus Job Retention (Furlough) Scheme was extended for a month with employees receiving 80% of their current salary for hours not worked and further economic support announced.
What has changed in the Furlough scheme?
The Furlough scheme will remain open until March, with employees receiving 80% of their current salary for hours not worked, up to a maximum of £2,500. Under the extended scheme, the cost for employers of retaining workers will be reduced compared to the current scheme, which ends on 31 October 2020. This means the extended furlough scheme is more generous for employers than it was in October.
Employers small or large, charitable or non-profit, are eligible for the extended Job Retention Scheme, which will continue until March 2021.
Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time, and will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs.
The Job Support Scheme, which was scheduled to come in on Sunday 1st November, has been postponed until the furlough scheme ends.
Who is eligible for the Furlough Extension?
Employers
- All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CRJS.
- The government expects that publicly funded organisations will not use the scheme, as has already been the case for CRJS but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.
Employees
- To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
- Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.
- 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 Coronavirus Job Retention Scheme.
- When claiming the Coronavirus Job Retention Scheme (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 National Insurance Contributions due on those amounts.
- You do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.
What support is being provided and employer costs:
- For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500 (to be reviewed in January). The grant must be paid to the employee in full.
- Employers will pay employer National Insurance Contributions (NICs) and pension contributions, and should continue to pay the employee for hours worked in the normal way.
- As with the current CJRS, 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.
What are the claim deadline dates?
Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month you’re claiming for. If this time falls on the weekend then claims should be submitted on the next working day.
| Claim for furlough days in | Claim must be submitted by |
|---|---|
| November 2020 | 14 December 2020 |
| December 2020 | 14 January 2021 |
| January 2021 | 15 February 2021 |
| February 2021 | 15 March 2021 |
| March 2021 | 14 April 2021 |
What agreements do employers need to have in place?
Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the 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 to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. You must:
- 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 your employees work and the number of hours they are furloughed (i.e. not working)
In order to furlough an employee an agreement must be in place, example agreements can be found here.
Contact Treetops for Furlough advice
If you have any questions regarding the new Furlough Support Scheme as a result of lockdown 2 then please contact us.
Treetops is based in Farnborough but we have clients from across a wide area, including in Berkshire and Surrey. No matter where you are based we can help you with our professional accounting services.
