Following our article last Friday about the CJRS the legal framework for the extended scheme has been issued in the form of a new Treasury Direction.
Read our previous article here.
The Treasury Direction
The Treasury Direction sets out in detail how the extended furlough scheme will work until 31 January 2021. Remember that the scheme has been extended until 31 March 2021, so we can expect an update to the Treasury Direction for the period from 1 February - 31 March 2021.
Much of what is set out in the Direction will be familiar to those who used the original scheme.
Below we highlight some of the key differences.
- Employers do not need to have used the scheme before to be eligible to claim a grant under the extended scheme, and there are no limits of the number of employees that can be claimed for.
- You can claim for employees who were employed on 30 October 2020, as long as a PAYE real time information (RTI) submission was made to HMRC between 20 March 2020 and 30 October 2020.
- It is possible to re-employ and claim for employees who have been made redundant or stopped working for their employer, provided that this employee was still on the payroll on 23 September 2020.
- It is now clear that from 1 December 2020, employers cannot claim under the extended scheme for any period when the employee is serving notice.
- HMRC will publish the following
information about an employer who makes a claim under the scheme in
December and January:
- name of the employer or qualifying PAYE scheme
- company reference number
- the amount of the claim (or a reasonable indication of it)
- The information will remain on the HMRC website for a year.
- HMRC will consider not publishing the information if it is satisfied that doing so will place individuals at serious risk of violence or intimidation.
- In order to make a claim under the extended scheme, there must be a furlough agreement in place before the beginning of the period to which the claim relates.
By way of a reminder, agreements:
- can be made by means of a collective agreement
- must be made or confirmed in writing
- must be retained for at least 5 years
When Claims Can be Made
- Without reasonable excuse the
deadline for making claims are:
- 29 December 2020 in relation to the November 2020 CJRS extension calendar month
- 28 January 2021 in relation to the December 2020 CJRS extension calendar month
- 1 March 2021 in relation to the January 2021 CJRS extension calendar month
Pay Reference Periods
- When calculating how much to claim
under the scheme, there are new pay reference periods for employees
who started their employment between 20 March and 30 October 2020
- For hours and salary that do not vary - their reference period will be the last pay period ending on or before 30 October 2020. These employees will only be eligible for periods starting on or after 1 November 2020.
- For variable hours - the calculation for the average number of hours worked will be the average hours worked from 6 April 2020 and up to the employee's first day spent on furlough on or after 1 November 2020.
- For variable pay - the calculation will require the average wages that were payable between 6 April 2020 (or the date their employment started if after this) and the day before they are furloughed on or after 1 November 2020.
TUPE (Transfer of Undertakings (Protection of Employment))
It is possible for employers to make claims under the extended CJRS for employees who transfer under TUPE, or the business succession rules if the employee:
- transferred from their previous employer on or after 1 September 2020
- was employed by either their old or new employer on 30 October 2020
- was on a PAYE RTI submission to HMRC by their old or new employer between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
We will provide further updates if the guidance changes. As stated earlier, we can expect a new Treasury Direction before the end of January 2021.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.