This article was updated on 18 December 2020

The Chancellor announced this week that the Coronavirus Job Retention Scheme (CJRS) would be extended to April 2021, giving businesses an extra month to use the scheme and plan their cash flows for 2021. Employees will continue to receive 80% of wages (subject to a monthly cap of £2,500 as before) until then.

The Chancellor also revealed that the UK's next budget would take place on 3 March, with latest economic forecasts from the Office for Budget Responsibility (OBR) to be published alongside it.

What you need to know

Employers will only have to contribute towards wages worked. As with existing CJRs guidelines, the payment of NIC and pensions must be paid in full by the employer.

Employers will have a fourteen-day window following each month end to lodge their CJRS return which means the first deadline will be Monday 14th December 2020 in respect of claim period ended Monday 30th November 2020. The Government were initially going to review their contribution level in January although as we understand it, the government will contribute 80% to 30 April 2021 which provides certainty about what support is available to employers across the UK. 

The statement follows the Bank of England announcement that an additional £150 billion will be injected into the UK economy by way of quantitative easing.

As a result of the extension, the Job Retention Scheme Bonus of £1,000 per eligible employee that was to be paid in February has been removed, with the Chancellor announcing that a revised retention incentive will be announced at the appropriate time.

Further guidance on the extension is expected to be announced on 10 November.

In the meantime, we have summarised the key points of the extended Job Retention Scheme below as a reminder.

Job Retention Scheme key points:

• The Job Retention Scheme will operate as the previous scheme did, with businesses paid upfront (within a fourteen-day period) for wage costs (there may be a delay in processing initial claims given the late reinstatement of the scheme).
• The August 2020 rates will be reinstated meaning that 80% can be claimed in respect of each furloughed employee. This level will continue until at least 31 January 2021 when it will be reviewed.
• Employers must still maintain PAYE and pension liabilities.
• Flexible furlough will be allowed throughout the scheme extension.
• The Job Support Scheme (JSS) has been postponed indefinitely.
• The Job Retention Scheme extension is open to new employers meaning you don’t need to have already benefited from the scheme either in phase one or two.
• To be eligible for the scheme, all employees must have been included on a successful real time information return by 23:59 on Friday 30 October 2020 (we’ll go on to explain further).

Who is eligible?

Employer

• As before, all employers with a UK bank account and operational PAYE scheme can claim the extended funding.
• The Treasury has announced that publicly funded organisations will not use the scheme which mirrors the existing CJRS guidance.

Employee

• To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30 October 2020. This means a (RTI) full payment submission must have been successfully filed.
• 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 CJRS.
• When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of seven 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 NICs due on those amounts.
• Those who have since been made redundant can be rehired and placed on the Scheme as long as they were employed as at 23 September 2020; and notified on a RTI submission on or before this date.

Calculations

Further guidance on the calculations is expected to be announced on 10 November.

Helpfully, it has been announced that the basis of the calculations for employees who were eligible under the existing scheme (i.e. were employed before 19 March 2020) will continue on the same basis in the extended scheme.

Where an employee was not previously eligible for the CJRS, updated reference periods will apply and full details of these will be announced next week.

What should employers do?

• Immediately update their agreements with employees and ensure both parties are clear on the current situation.
• Communicate with your workforce and help manage the confusion created by this last-minute change within government.
• Determine a suitable working rota should you wish to utilise flexible furlough and ensure this is shared with your payroll department or provider.

Employee Communication

Due to the delays with technical guidance, the Government confirmed that furlough can be backdated. So a retrospective agreement can be applied, but only up until Friday 13 November 2020. That is the cut-off date for retrospective agreements under the new scheme if you would like to use this from 1st November 2020.

Using the retrospective window is a perfect opportunity to check that furlough letters were correct. If not, they could undermine the business’ whole entitlement to furlough grants.

Here to help

If you would like to discuss this further, or find out how Johnston Carmichael can help you at this challenging time, please don't hesitate to get in touch with me or your usual Johnston Carmichael adviser.

Opinion

As we noted in our previous blog last week, further extending the JRS and postponing the JSS and all the complications therein is a welcome move and will allow employers to plan more effectively over the winter months.