On 31st October 2020 the government announced that the Coronavirus Job Retention Scheme (CJRS), also known as the furlough scheme, is being extended. Since then, a further extension of the scheme was announced on 5th November 2020.
With this extension comes new and updated information, which must be acknowledged and understood fully to ensure furloughed employees continue to be paid correctly.
Although HMRC are still yet to confirm the extended CJRS calculations, we’ve put together a summary of all the important information we hold so far, and what we’re doing to support our customers.
The Coronavirus Job Retention Scheme has now been extended from 1st November 2020 until 31st March 2021. The government will be reviewing the policy in January and have said that any part of the UK will be able to access the scheme if it needs to lock down in this time.
HMRC grants will be issued to cover 80% of furloughed employee’s current salary for hours not worked, capped at £2,500 per month. This mirrors what was offered through the CJRS in August. As mentioned above, this will be reviewed by the government in January.
Employees need to have been processed through PAYE RTI on or before 30th October 2020 to be eligible for payment. If employees were processed through PAYE RTI on or before 23rd September 2020 and were then made redundant or stopped working for you, they can also qualify for the scheme if you re-employ them.
The employer’s National Insurance (NI) and pension contributions need to be covered by the employer during the CJRS extension.
Although HMRC are yet to confirm the exact calculation for the extended CJRS, it will follow roughly the same method as is currently being used. Employers can claim the grant calculated by reference to the employee’s usual hours worked in a claim period.
Change to reference pay
During the extension, the figure used as reference pay for salaried employees will be the greater of:
- Wages in the last pay period ending on or before 30th October 2020
- Wages in the last pay period ending on or before 19th March 2020
The figure used as reference pay for variable paid employees will be the greater of:
- Wages earned in the same calendar period in the tax year 2019 to 2020
- Average wages in the tax year 2019 to 2020
- Average wages from 1st February 2020 (or the employee’s start date if later) until 30th October 2020
Change to usual hours
Similarly, the figure used as usual hours for salaried employees will now be the greater of:
- Contract hours at the end of the last full pay period ending on or before 30th October 2020
- Contract hours at the end of the last full pay period ending on or before 19th March 2020
The figure used as usual hours for variable paid employees will be the greater of:
- Hours worked in the same calendar period in the tax year 2019 to 2020
- Average hours worked in the tax year 2019 to 2020
- Average hours worked from 1st February 2020 (or the employee’s start date if later) until 30th March 2020
How Zellis can support you
Many employers are paying their furloughed employees accurately and effortlessly using dedicated functionality in our award-winning payroll and HR software. Please be assured that our software is currently being updated to continue supporting you during the extension of the CJRS.
Further information regarding the extension of the Coronavirus Job Retention Scheme has been provided by HMRC.
To learn more about how we can support your organisation during this challenging period, please visit our coronavirus (COVID-19) page.