Following last week’s extension of the CJRS furlough scheme, the Government has now published thirteen sets of guidance with further detail of how the scheme will operate until its planned end date in on 31 March 2021. Despite this proliferation of guidance, some points remain unclear, and until the Government publishes the actual rules, in the form of a Treasury Direction, some degree of uncertainty will remain.
The good news for employers is that the extended scheme is fundamentally very similar to the original furlough scheme. It remains a flexible scheme, paying 80% of salary, to a cap of £2,500 per month. Some of the key points are set out below, but clients should feel free to contact any member of the team with any questions.
- Start date: Employers can agree to retrospectively to furlough someone with effect from 1 November 2020, as long as the agreement to retrospectively claim furlough occurs on or before 13 November (i.e. this Friday).
- Eligibility: The extended scheme is available for employees who were employed on or after 30 October. There is no maximum number of employees. Employees who were made redundant or who otherwise stopped working for the company on or after 23 September can also be re-employed and then furloughed for claim periods after 1 November. This poses an interesting question regarding rehiring, particularly with employees who have resigned.
- Employer costs: As before, there is an ability, but no obligation, to top up the furlough payment. The only mandatory cost is that employers will be liable for employer National Insurance contributions and employer pension contributions.
- Furlough Agreement: Firms must confirm in writing to the employee that they have been furloughed (either flexibly or full-time), and keep a written record of the agreement for five years. Employers must also keep records of how many hours their employees work and the number of hours they are furloughed.
- Flexible furlough: Employees can work for any amount of time and any work pattern, but they cannot undertake any work during hours recorded as being on furlough.
- Redundancy: As previously, employers can make furloughed staff redundant (during or after furlough), but cannot use grants to substitute redundancy payments. Redundancy pay is based on normal wage and not the furlough rate.
- Claiming during notice: It has always been possible to terminate employment while an employee remains on furlough, whether for redundancy or some other reason. That remains the case. The guidance confirms that employers are permitted to claim during a statutory notice period. It was possible under the original scheme to claim during notice periods, whether the statutory minimum notice or a longer contractual period. This appears set to change, although the position is not clear. One of the sets of guidance says: the Government is reviewing whether employers should be able to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1 December 2020, with further guidance to be published in late November. If the scheme distinguishes between statutory and contractual notice, some employers may find the additional complexity administratively burdensome.
- TUPE: The guidance confirms that TUPE'd employees can be furloughed under the extended CJRS provided they (i) transferred from their old employer to their new employer on or after 1 September 2020; (ii) were employed by either their old employer or new employer on 30 October 2020; and (iii) were on a PAYE Real Time Information (RTI) submission to HMRC, by their old or new employer between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
- Claim process and record keeping: The claim deadline is the 14th of the following month, except for claims relating to January and February (where it is the 15th of the following month). Once HMRC has confirmed the claim is correct, payment will be made within six working days. Employers must keep a copy of all claims records for six years.
- The “name and shame” point: This is a very significant change. The guidance says that from December 2020, HMRC will publish employer names [and] for companies and Limited Liability Partnerships (LLPs), the company registration number of those who have made claims under the scheme for the month of December onwards. Although helpfully, it is clear that HMRC will not publish any further information as was envisaged under the JSS (such as potentially the value of claims made). It is also worth noting that the restrictions on capital distributions that had been a notable feature of the JSS have not been replicated in the extended CJRS.
Links to the most important sections of the guidance are below for ease of reference: