The 8 things you need to know about the Coronavirus Job Retention Scheme extension

As you will know, the introduction of the November lockdown has brought with it a number of changes to previously published policies and schemes, including the extension of the furlough scheme. Whilst the policy paper that accompanied this announcement on 5 November provides us with a little more information, further guidance was only released yesterday. An additional announcement will detail whether the full 80% employer funding will continue from January to the end of the scheme.   

Whilst we work through the latest guidance to under the impact on employers and agents, here are the 8 things you need to know about the changes:

1. Weekly payrolls

The first weekly payrolls for November have already been run, when there was no indication of what reference pay or usual hours calculation was to be used for employees who had not been furloughed previously. Hopefully the new guidance will allow corrections to be made next week and before the vast majority of monthly payrolls are run.

2. Pay reference periods 

For employees eligible for the previous iterations of the Coronavirus Job Retention Scheme (CJRS), the reference pay remains the same as the calculation for the CJRS scheme that ended on 31 October. This is the case even if the employer did not make a claim for the employee.

Other employees may be now be eligible for the CJRS.3 as they either:

  • Had earnings for 2019/20 reported on a full payment submission (FPS) from 20 March 2020 to 19 April 2020 (19 April being the deadline for 2019/20 submissions), or
  • Had earnings for 2020/21 reported on a full payment submission from 6 April 2020 to 30 October 2020

The pay reference period will be:

  • For fixed-rate employees – the last pay period on or before 30 October 2020.
  • For variable pay employees – the average over the period from 6 April 2020 to last pay period on, or before, the day before they were furloughed under the new CJRS scheme

Note: fixed-rate employees can be treated as variable if they have lots of fluctuating additional pay such as overtime.

3. Directors of owner managed businesses 

One of the groups who were excluded from the schemes up to 3 October were Directors of owner managed businesses who had reported their annual payment for 2019/20 to HMRC after 19 March 2020. They will now be included as they have earnings reported by 30 October 2020. Their furlough rate of earnings is based on what was reported in the period from 20 March to 30 October 2020 subject to the £2,500 monthly pay cap. Remember this £2,500 cap is pro-rated to the number of furloughed hours as a proportion of usual hours. Directors who are flexi-furloughing (more likely than full furlough) will have to evidence their usual hours for this time of year which is the issue we’ve had since the start of the furlough scheme. 

4. Usual hours

For previously eligible employees, the usual hours remain as per the calculation for the scheme that ended on 31 October. This is the case even if the employer did not make a claim for the employee.

For newly eligible employees, usual hours will be:

  • For fixed rate employees the contracted hours worked in the last pay period ending on or before 30 October 2020. 
  • For variable pay employees the average hours worked between 6 April 2020 and the day before they were furloughed under the new scheme

The usual hours continue to be based on the calendar days in the claim period.

5. Claims and deadlines

One of the most concerning differences from the scheme that ended on 31 October is the fact that claims for the prior month have to be made by the 14th of the following month. Thus, claims up to 30 November have to be claimed by the 14 December. 

This will put an enormous burden on employers and agents and may prove impossible where payments for the month of November are paid in arrears in December with timesheets having to be collated. We will have to see whether an estimated claim is worth making by the deadline, and whether HMRC will allow corrections after the 14th of each month.

Claim periods will cover a minimum of seven days and I assume orphan periods will be a feature of the new scheme, where a week split is over two calendar months, meaning there will be less than seven days. This should be okay as long as it’s preceded or followed by a seven day period of furlough.

Claims can be made in advance (I assume as now 14 days before payday) and employer’s bank account will be credited within six days. The new claim portal will open at 8am on 11 November.

Employers are not required to submit their RTI returns before making a claim, so we appear to have returned to the ‘pay now check later’ model that we had in the previous CJRS schemes and is in contrast to the plan for the Job Support Schemes.  There is also no mention in the policy paper of informing employees that their employer has claimed on their behalf as had been the intention with the Job Support Scheme (JSS), but employers using the scheme will be named.

6. Rehires

Individuals who had a date of leaving reported after the 23 September 2020 can be reinstated if the employer so chooses.

7. Contract changes

The government has recognised that it has been impossible to put in place furlough agreements from 1 November, given that employers were not aware what the reference pay period would be. Contract changes can be backdated to 1 November 2020 but must be issued by 13 November. This could be challenging however, given the new guidance is promised on 10 November.

8. Schemes scrapped

The job support scheme will not be coming into effect this tax year and the job retention bonus has been scrapped.

But what hasn’t changed from the CJR schemes that ran up to 31 October?

  • All employment rights continue during furlough, for example, accrual of holiday pay and leave.
  • Employees can be included in a CJRS claim when they are off sick, and must be paid at least the level of Statutory Sick Pay (SSP). Employers can choose to either pay SSP only or furlough pay, and clearly the latter is more beneficial to the employee and employer. 
  • Employers can top up pay but aren’t obliged to.
  • Employers will still be liable for employer’s NIC and pension contributions for any unworked hours
  • Employees can train, volunteer or work for another employer whilst furloughed.


This blog is taken from an original article written for and published by AccountingWEB. Find out more here.