COVID-19: Furlough scheme extended until December 2020
Market Insight2 November 20202 November 2020
Global, UK & Europe
On 31 October 2020 the government announced that the Coronavirus Job Retention Scheme (CJRS), which was due to end that day, would be extended until December 2020. This extension will provide support to businesses and employees during the lockdown in England which begins on 5 November 2020. The new Job Support Scheme (which was planned to start on 1 November 2020) will now be delayed and will be introduced when the extended CJRS ends.
Here, we set out what we know so far about the extended CJRS from the Treasury announcement.
The extended CJRS started on 1 November 2020 and will be open for "a month". It is not clear precisely when the end date is – lockdown restrictions in England are currently set to continue until 2 December 2020.
Neither the employer nor the employee need to have previously used the CJRS - the scheme is available in respect of employees who were on the employer’s PAYE payroll by 23:59 on 30 October 2020. This means a Real Time Information submission notifying payment for that employee to HMRC must have been made before 31 October 2020.
The level of support and flexibility available under the extended scheme mirrors that which was available under the CJRS in August:
The government will pay 80% of employees' normal pay for hours not worked, up to a cap of £2,500.
Employers will pay employer National Insurance Contributions (NICs) and pension contributions.
Employers can claim the grant for the hours that their employees are not working, calculated by reference to their usual hours worked in a claim period. The methodology for these calculations will broadly follow those under the CJRS.
Flexible furlough is allowed, as well as full-time furlough.
Employers should continue to pay employees for hours worked, and the tax and NICs due on those amounts, in the normal way.
The grant must be paid to employees in full.
When claiming the CJRS grant for furloughed hours, employers need to report and claim for a minimum period of seven consecutive calendar days.
As previously under the CJRS, employers can choose to top up employees' wages above the grant if they wish.
The government expects that publicly funded organisations will not use this scheme, but partially publicly funded organisations may be eligible where their private revenues have been disrupted.
There will be no gap in eligibility for support between the previously announced end-date of CJRS and the extended CJRS, and the government will confirm shortly when claims can be made in respect of employee wage costs during November.
Additional support is available for businesses in England that are forced to close their premises.
Implications for employers
For those employers that have put Job Support Scheme (JSS) agreements in place already, in anticipation of that scheme starting on 1 November 2020, they should contact affected employees and ask them to agree to continue on, or go on, furlough under the CJRS instead.
The requirement for employees to be on a PAYE payroll before 31 October 2020 means that those employees who did not qualify for the CJRS but who were eligible for the JSS will also be eligible for the extended CJRS.
Further details about this scheme and guidance are expected soon.