Last updated 1 June 2021
Main changes made: Highlighting new claims templates for employers making claims for 16-99 staff.
On 3 March 2021, at the Spring Budget, the Chancellor confirmed that the Coronavirus Job Retention Scheme (CJRS) will run until 30 September 2021.
The current version of the scheme is the third iteration of the original CJRS that commenced in March 2020. This 'extended' scheme commenced on 1 November 2020, following the announcement of further lockdown measures for England at the time, and was originally intended to run until 31 December 2020. This end date has since been pushed back a number of times as the pandemic has evolved. On 5 November 2020, the Chancellor announced that the scheme would run until 31 March 2021. At the same time, both the proposed Job Support Scheme and the Job Retention Bonus were postponed. On 17 December 2020, the Chancellor confirmed a further extension of the CJRS to 30 April 2021. The latest extension to 30 September 2021 means the third version of the scheme will run for a total of 11 months.
Full guidance on the scheme is available on GOV.UK on their Coronavirus Job Retention Scheme pages.
Details of earlier versions of the scheme which ran from March 2020 to June 2020 (version 1) and July to October 2020 (version 2) can be found here.
Outline of the scheme
The key features of the extended CJRS (version 3) are:
- Employees are entitled to 80% of the current salary for hours not worked up to a maximum cap of £2,500 per month throughout the lifetime of this scheme.
- Employees can be fully or flexibly furloughed – so they are permitted to work part time and be paid their usual salary for those hours, while receiving furlough pay at 80% for their unworked hours.
- Employees must agree to being fully or part furloughed before their new working arrangements start and the employer must confirm details of their new terms and conditions in writing.
- Employees who are required to shield, are clinically vulnerable or have childcare responsibilities can be furloughed.
- Employers can claim support from the Government for the cost of unworked hours, although the support will reduce from 1 July 2021 with employers asked to contribute to employees' furlough pay during July to September.
- Employers must meet any associated costs of Employer's National Insurance Contributions (NIC) and pension contributions from November 2020 to September 2021.
- Claims should start and end in the same month.
- Claims should run for a minimum period of 7 consecutive days unless they relate to a short period at the start or end of a month.
- Employers can claim up to 14 days in advance of making payments to staff but are encouraged to defer claiming until staff hours are finalised where possible, to avoid having to amend claims.
Employees should receive up 80% of their usual pay for the hours not worked throughout. There are special rules to determine what an individual’s usual pay is. (NB For periods from 1 May, changes were made affecting how average wages should be calculated when an employee has variable pay and has had periods of statutory leave. These changes are explained under the heading ‘Employees returning from family-related statutory leave’.)
All employers with a UK, Isle of Man or Channel Islands bank account and UK PAYE scheme will be eligible to furlough staff if they are unable to maintain their workforce because of the effects of coronavirus.
For the period from 1 November 2020 to 30 June 2021, employers can claim support for 80% of the employee’s salary for unworked hours, but employers must meet any associated Employers' NIC and pension contributions themselves.
From 1 July 2021, the amount of support that employers can claim will start to reduce. This reduction is intended to coincide with the opening up of the economy as lockdown measures are reduced.
- For July 2021 employers will be able to claim 70% of the employee’s usual wages for hours not worked, up to a cap of £2,187.50 per month.
- For August and September 2021 employers will be able to claim 60% of the employee’s usual wages for hours not worked, up to a cap of £1,875 per month.
This means that in July employers will need to contribute 10% of the cost of unworked hours (up to a cap of £312.50 per month) themselves, rising to 20% for August and September (up to a cap of £625 per month), in addition to paying any associated Employers' NIC and pension contributions.
As under the previous versions of the scheme, employees on any form of contract will be eligible for furlough. This includes company directors, although support is only available for remuneration taken as salary, not as dividends. Support will be provided for usual hours not worked, with the calculations of usual hours largely following the principles established in version 2 of the scheme when flexible furlough was introduced.
To include an employee in a claim for furlough, the employer must have included that employee on their payroll by specific dates. Being included on the payroll means that HMRC has received an RTI submission reporting a payment to the employee by the employer by the required date.
For claims starting from 1 May 2021:
- Employees must have been on the employer’s payroll (i.e a payment of earnings must have been notified to HMRC) for the employee at some point between 20 March 2020 and 2 March 2021.
For claims ending on or before 30 April 2021:
- The employee must have been included on an RTI submission at some point between 20 March and 23:59 on 30 October 2020; or
- If the employee was made redundant or stopped working for the employer, they can be still be furloughed if they were re-employed after 30 October 2020 as long as they were on the employers' payroll by 23:59 on 23 September 2020.
The extended scheme therefore includes individuals who started work for the employer after 19 March 2020 and who were excluded from earlier schemes.
There are special rules which apply if employees are transferred from another business under TUPE.
As under previous schemes, employees must not do work for their employer during furloughed hours. Employees who continue to work will put their employer’s claims at risk and employers should take steps to actively ensure that employees are not working during furloughed hours.
Employees can undertake training during furloughed hours provided that:
- they do not generate income for or provide services to their employer; and
- their furlough pay covers the appropriate National Minimum Wage for their age for the time they spend training. If it does not, their pay must be topped up.
For the version 3 of the scheme, the claim window closes 14 days from the end of the month (or the next working day where this is a weekend or bank holiday). Late claims will not be accepted unless the employer can show that they had a reasonable excuse. The deadlines for claims can be found on GOV.UK.
On 28 May, HMRC announced that they would be expanding the number of employers who can use a template to make a claim, rather than enter the details of each member of staff for whom a claim is being made manually into the online system.
Employers who have furloughed 16 to 99 employees will be able to claim by uploading a template to HMRC. Previously only employers who were claiming for 100 or more employees could use the template approach.
Publishing Employer Names
One of the new elements of the extended CJRS is that HMRC are publishing the names of employers who have made claims under the scheme together with an indication of the amount each employer has claimed.
The published details will only relate to claims made relating to periods from 1 December 2020. So an employer who only made claims during March to September 2020 for example and does not intend to claim again, will not have their details published. An employer who started to claim in March 2020 and intends to claim until July 2021 will have details of their claims for the months of December 2020 to July 2021 published.
The publicity measures are new, and follow recommendations from an NAO report in October 2020 that such publicity could help to reduce fraud by enabling employees to see whether their employer was making claims on their behalf. Employees are able to check if a claim has been made in respect of them since December 2020 by logging into their Personal Tax Account.
We have written more about the publication of employer names here.
Key differences to earlier schemes
In general, the third version of the CJRS (version 3) will operate very much as the earlier versions did from March to June 2020 (version 1) and July to October 2020 (version 2).
The key differences to note are:
- Employees do not need to have been furloughed prior to 1 November to be eligible for CJRS version 3. The rules which required an employee to have been furloughed under version 1 of the scheme to access support under version 2, will not apply to version 3.
- The cap on the maximum number of employees who could be furloughed which applied under version 2 of the scheme has been lifted. From 1 November, there is no limit on the number of eligible employees who can be furloughed under version 3.
- The names of employers using the scheme will be published (see above).
Where an employer identifies that they have made an overclaim, they should adjust this on their next claim or contact HMRC for a payment reference number. Guidance on the process, including how to report overclaims on subsequent claims, is available from HMRC.
Employers should notify HMRC and repay any overpayments by the later of:
- 90 days from receiving the CJRS money they were not entitled to
- 90 days from the point circumstances changed so that they were no longer entitled to keep the CJRS grant.