This note is current as at 6pm on 12 November 2020
On Friday 6 November, we reported on the extension of the Coronavirus Job Retention Scheme (“Furlough Scheme”) following the Chancellor’s announcement on 5 November that it would remain in place until 31 March 2021.A copy of our last briefing can be found here.
In the evening of 10 November, the Government published its promised updated guidance on the Furlough Scheme (across 10 documents), setting out the full details of how it applies in respect of the period ending 31 October 2020 and now (more crucially) to claims from 1 November 2020.
We have summarised below the key additional information we now have on the terms of the extended Furlough Scheme as a result of the updated guidance.The most significant point to note is a change in approach with regard to employers’ ability to claim for notice monies under the Scheme.
The extended Furlough Scheme is addressed in the following 10 separate guidance documents (in updates to the previous guidance on the Scheme as it applied between 1 July and 31 October). However, there are some key differences, as we outline below.
Claim for wages through the CJRS
Check which employees you can put on furlough to use the CJRS
Check if you can claim for your employees’ wages through the CJRS
Calculate how much you can claim using the CJRS
Steps to take before calculating your claim using the CJRS
Reporting employees’ wages to HMRC when you’ve claimed through the CJRS
Examples of how to calculate your employees' wages, National Insurance contributions and pension contributions
Full examples of how to calculate the amount you should claim for an employee who is flexibly furloughed
Pay CJRS grants back
Check if your employer can use the CJRS
No new or updated Treasury Direction has been published yet.
The level of support
As we reported in our last briefing, the Furlough Scheme will now run from 1 November 2020 until 31 March 2021, with employers able to claim and employees entitled to receive 80% of their normal wages for hours not worked, up to a maximum of £2,500 per month.
However, this is only guaranteed to be the position until 31 January 2021. This level of support will be reviewed in January and any changes for claim periods from February onwards will be published in updated guidance.
Agreement with the employer
Whilst it is still the case that employers must agree with their employees (or the relevant recognised trade union) that they will be furloughed, and that agreement must be confirmed in writing, the updated guidance confirms that any retrospective agreement to cover the period from 1 November 2020 must be put in place on or before 13 November.
What isn’t entirely clear is whether that “agreement” can be made orally by 13 November but confirmed in writing later. To be on the safe side, employers are best advised to get their written agreements/confirmations in place by that date.
Helpfully, for the first time the employee-facing guidance (Check if your employer can use the CJRS) specifically states that it is up to the employer to decide whether or not to offer an employee a furlough agreement.
Redundancies and rehiring
The guidance makes it absolutely clear that that any employees who were employed and on the payroll on 23 September but who were made redundant or “stopped working” for their employer (including those on fixed term contracts that had expired) on or after that date can be “re-employed” and claimed for, provided that the employer had made a RTI submission to HMRC between 20 March 2020 to 30 October 2020, notifying a payment of earnings for those employees.
There appears to be no deadline by which employees have to be re-employed to be eligible for the grant.
As we noted previously, any employer who is considering re-employing former employees should bear in mind it is not of course cost neutral to do so and will need to consider issues such as when employees’ employment should be backdated to, whether continuity of service will be preserved and if so whether they will have unfair dismissal rights when the furlough period is over, and how termination payments already made should be dealt with.
Furlough during notice period
What has come as a surprise (and will alarm many employers) is that, whilst the guidance (Check which employees you can put on furlough) still states “You can continue to claim for a furloughed employee who is serving a statutory notice period”, it also warns that the question of whether a claim can be made in respect of a period of contractual or statutory notice is under review. It goes on to say that the Government “will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November.”
The same warning is also given in the employee-facing guidance, putting employees on notice that it is likely that their employer will not be able to claim the grant in respect of any part of their notice period during which they are furloughed from 1 December.
This signals a change of policy on this issue by the Government, which could be financially problematic for employers in particular those who have held off on serving notice of termination since the initial announcement of the extension to the Furlough Scheme was made, in the expectation that the grant would cover notice periods as it previously had. It may also result in employers being less willing to re-hire those who left on or after 23 September.
TUPE and furlough
As expected, the guidance confirms that the extended Furlough Scheme applies to new employers of employees who have transferred to them pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006 or where the PAYE business succession rules apply to the change in ownership. The most recently updated guidance states that such employees will be eligible provided that they were:
Transferred from their old employer to their new employer on or after 1 September 2020;
Employed by either their old or new employer on 30 October 2020; and
Included on a RTI submission notifying their earnings to HMRC, by their old or new employer, between 20 March 2020 and 30 October 2020.
Presumably, those who transferred to their new employer prior to 1 September will not only be on their new employer’s payroll but will have had an RTI submission made for them so as to qualify with the new employer for the grant.
Reference pay and usual hours
The guidance makes it absolutely clear that, when calculating an employee’s wages or determining their usual hours for the purposes of claiming under the Furlough Scheme:
For employees who were either (a) on their employer’s payroll on 19 March 2020; or (b) previously furloughed and validly claimed for in a claim period ending on or before 31 October 2020, the same calculations as under the original Scheme should be used. So, for example for salaried employees the grant will cover 80% of their salary in their last pay period to 19 March 2020 (even if they have had a pay increase or decrease in the meantime) on the basis of their contracted hours of work at that time; but
For everyone else:
salaried employees’ wages must be calculated on the basis of what they received in their last period ending on or before 30 October 2020;
employees with fixed hours - “usual hours” should similarly be determined on the basis of their contracted hours worked in the last pay period ending on or before 30 October 2020;
employees with variable pay - wages must be calculated on the basis of what they received between (i) the later of the date their employment commenced and 6 April 2020; and (ii) the day before their period of furlough leave under the extended Furlough Scheme begins; and
employees who work variable hours - “usual hours” are the average hours worked between 6 April 2020 and the day before their period of furlough leave under the extended Furlough Scheme begins.
Shielding and caring
There is no longer any formal concept of “shielding” due to coronavirus. The guidance now refers to those who are unable to work because they are “clinically extremely vulnerable, or at the highest risk of severe illness from coronavirus and following public health guidance”. Such employees, along with those with caring responsibilities (including in relation to children) who are unable to work can be furloughed. However, those who need to stay at home with someone who is extremely vulnerable or at high risk will no longer be eligible for the grant simply because they are trying to protect the vulnerable/high risk individual from contracting the virus. They would only qualify if they had caring responsibility for them.
Working for more than one employer
The rules relating to multiple employments under the Furlough Scheme are the same as they were previously. In particular, an employee who is furloughed with one employer can continue to work for, or take up a second job with, another employer (where their contract does not prevent them from doing so).
Furthermore, employees can be furloughed for each job they have. Under the Furlough Scheme, each job has always been treated separately for these purposes in that the £2,500 cap has always applied to each employer individually – well at least it has until now. The updated guidance (Check which employees you can put on furlough) states “Each job is separate, and for claims for periods on or before 31 October 2020 - the cap applies to each employer individually.” The inference to be taken from the words underlined which have been added to the guidance as part of the latest updates is that the same may not apply to claims for periods from 1 November 2020.
Interestingly, the same qualification does not appear in the employee-facing guidance (Check if your employer can use the CJRS), which simply states: “You can be put on furlough by one employer and continue to work for another. If you’re put on furlough by more than one employer, you’ll receive separate payments from each employer. The £2,500 monthly cap applies to each job”.
Hopefully the Government will clarify the position shortly.
Naming and shaming
The guidance expressly states that from December, HMRC will publish the names and registration numbers of any companies and Limited Liability Partnerships who have made claims under the Scheme for the month of December onwards. This is noted in the employee-facing guidance as well as the employer guidance, no doubt as a means of helping the Government police the proper use of the Furlough Scheme and to encourage employees to report those organisations that abuse it.
Important dates and deadlines
Retrospective furlough agreement
Any agreement to retrospectively furlough an employee with effect from 1 November 2020 must have been made by 13 November 2020
Claim period 1 – 31 October 2020
Claims must be submitted by 30 November 2020
Claim period 1 – 30 November 2020
The claim window has now opened and closes on 14 December 2020.
Subsequent claim periods
Claims for periods from 1 December onwards must be made by the 14th of the month following the end of the relevant claim period
Amendments to increase claims made from 1 November 2020
Any amendment to increase the amount previously claimed must be submitted within 28 calendar days after the month the claim relates to (or the next working day if this falls on a weekend).
A warning about late claims
It is important that employers submit their claims for the furlough grant within the relevant claim window. Whilst HMRC will consider accepting a late claim, the guidance states that it will only do so if there was a “reasonable excuse” for failing to make a claim in time and the employer submitted the claim “without delay after the excused no longer applied”. What HMRC would consider to be a reasonable excuse is not clear. What is clear however is that HMRC will not entertain any application for an extension or consider reasonable excuses in advance of the claim deadline.