This content was last updated 18 December 2020
The Coronavirus Job Retention Scheme (CJRS) will now remain open until April 2021, with employees receiving 80 per cent of their current salary for hours not worked, up to a maximum of £2,500. Under the extended scheme, the cost for employers of retaining workers will be reduced.
Businesses will have the flexibility to bring furloughed employees back to work on a part-time basis or furlough them full-time, and will only be asked to cover National Insurance contributions and employer pensions for hours not worked.
Employees that were employed and on the payroll on 23 September 2020 (the day before the Job Support Scheme announcement) who were made redundant or stopped working afterwards can be re-employed and claimed for. The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees. Find out how to check and claim for employee's wages through the GOV.UK website.
The Job Support Scheme will be introduced following the end of the CJRS.
Am I eligible for the furlough extension?
Neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS to make a claim under the extended CJRS (if other eligibility criteria are met). An employer can claim for employees who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
How do I claim?
The extended CJRS will operate as the previous scheme did, with businesses being able to claim either shortly before, during or after running payroll.
Claims for December 2020 must be made by 14 January 2021. You can no longer submit claims for claim periods ending on or before 31 October 2020.
Can my employees still be on flexible furlough?
Yes. Since 1 July 2020, furloughed employees have been able to return to the workplace on a part-time basis. You’ll still be able to place staff on flexible furlough, provided they’re eligible.
Flexible furlough agreements can last any amount of time, however, the minimum period that employers can claim must be a minimum of 7 calendar days. Find out how to calculate claims for an employee who is flexibly furloughed.
You will only be able to claim via the CJRS for employees’ wages for the periods where they haven’t worked.
You will need to submit the following details to HMRC:
- The usual hours an employee would be expected to work, based on the number of hours the employee was contracted for at the end of the last pay period
- The actual hours worked, or which will be worked
Find out how to report employees’ wages to HMRC using the PAYE Real Time Information system when you’ve claimed wages through the CJRS.
It’s important to remember the following:
- When claiming for unworked hours, employers will need to report and claim for a minimum period of 7 calendar days, unless a claim is being made for the first or last few days in a month.
- Claim periods must not overlap months.
- The number of employees you can claim for in any claim period must not exceed the maximum number of employees you have previously claimed for through the CJRS.
If you’re unsure, FSB members can refer to the flexible furlough factsheet on the FSB Legal Hub for more information.
Do I need to change employees’ contracts?
If you’re bringing back furloughed employees on reduced hours, you must agree to the new working patterns as a temporary variation of the contract, if the existing contract does not allow you to do so.
Agreements regarding work during furlough must be confirmed in writing under the terms of the CJRS rules.
You can read our guide to employment contracts to learn more.
What about the Job Retention Bonus?
It was announced when furlough was extended until March 2021 that a retention bonus would be redeployed closer to the time. More details will be published.
What if I can’t afford employer contributions?
Furloughed employees are entitled to receive 80 per cent of their wages, up to a cap of £2,500, until the scheme ends. Contributions from the employer are mandatory.
You may need to remove employees from the furlough scheme and consider alternatives, such as short-term working or redundancies.
Can I make an employee redundant whilst on furlough?
Yes. Our guide to the redundancy process during COVID-19 outlines everything you need to consider when making employees redundant, to ensure this is done in a compassionate and legal way.
Remember, redundancy pay must be calculated based on standard wages, not furloughed wages.
What are the alternatives to redundancy?
Redundancies are a difficult decision for any small business owner to make. Although redundancies will reduce your immediate employment costs, there are other factors to be aware of, such as:
- Redundancy payments
- Time spent following processes
- The potential risk of unfair dismissal
- Loss of skills
- Costs of recruitment in the future
There are a number of redundancy alternatives you may wish to consider:
- Redeployment: Moving an employee to other areas of the business where there is more demand, either temporarily or permanently.
- Lay-offs: If it’s not viable to keep an employee on the furlough scheme due to increasing contributions, or they aren’t eligible, you may want to discuss the option of unpaid leave.
- Short-time working or reduced hours: If there is a temporary downturn of work, you might want to place employees on reduced hours outside of the furlough scheme and only pay for the hours they work.
- Short-term or long-term pay reductions: Temporary or permanent pay cuts may be agreed upon by staff to avoid redundancies in certain circumstances. It’s important to ensure that this payment is not below the National Minimum Wage.
In all cases, you must have the employee’s written consent unless their existing employment contract allows you to make these changes.
If the period of short-time working or lay-off is over four weeks or more than six weeks in a 12-week period, employees have a statutory right to treat themselves as dismissed by reason of redundancy and are entitled to redundancy pay (unless the employer serves a counter-notice stating otherwise where certain conditions are met.)
More questions about employment?
With FSB Employment Protection, you have access to all the HR help you need to run your business, including contract templates, detailed guides, and a 24/7 legal advice line.
FSB members have access to a detailed factsheet regarding the furlough scheme and all upcoming changes on the FSB Legal Hub.
- FSB members have access to a detailed factsheet regarding the furlough scheme and all upcoming changes on the FSB Legal Hub, as well as a 24/7 legal advice line.
- Visit our coronavirus hub for advice and guidance on managing employees, returning from furlough, redundancies and employment contracts
- How to calculate claims for an employee who is flexibly furloughed
- How to calculate wages, National Insurance contributions and pension contributions for claim periods spanning June and July
- How to report employees’ wages to HMRC using the PAYE Real Time Information system when you’ve claimed wages through the CJRS
Losing employees is difficult for any small business. Our guide walks you through the redundancy process and how you can ensure it’s carried out in a compassionate, legal way.
Bringing your employee back from furlough? We look at how to recall your staff from furlough leave, including notice periods and flexible furlough.
We answer your questions about managing your employees, looking after their wellbeing and managing health and safety in the workplace.