Owner Kate Upcraft Consultancy Ltd
Share this content

CJRS extension: Get the details right

Kate Upcraft explains what employers and tax agents need to know about the new version of the coronavirus job retention scheme (CJRS.3) which will apply from November 2020 to March 2021.

6th Nov 2020
Owner Kate Upcraft Consultancy Ltd
Share this content
Chancellor Rishi Sunak meets business leaders to discuss further financial support at a restaurant in central London
Flickr_Sunak-meets-business-leaders_HMTreasury
Chancellor Rishi Sunak meets business leaders to discuss further financial support at a restaurant in central London.

The policy paper that accompanied Chancellor Rishi Sunak’s announcement on 5 November provides us with a little more information, but it promises that more guidance will be produced on Tuesday 10 November. A further announcement will detail whether the full 80% employer funding will continue from January to the end of the scheme.  

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.

Pay reference periods

For employees eligible for the previous iterations of the CJRS, the reference pay remains as the calculation for CJRS.2 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 eligible for 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 CJRS.3.

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

Is it fair?

The calculation of reference pay appears more generous for variable-paid than for fixed-rate employees. Any pay rises from 1 November to start of furlough will be ignored for fixed rate employees, but pay will be included in the average for variable pay employees over (potentially) a much longer period if the business doesn’t need to furlough immediately under CJRS.3.

Conversely there doesn’t appear to be the option to use the pay period before the start of furlough if that was higher than the average for a variable pay employee.

There is also a strange outcome where an employee began work in October, as a fixed rate employee on say national minimum wage; they would be furloughed on £8.72 per hour, whereas a colleague employed since February 2020 would only be furloughed based on £8.21 per hour.

Owner managed businesses

Directors who reported their annual payment for 2019/20 to HMRC after 19 March 2020 will now be included in CJRS.3 having been excluded up until 31 October. The rate of earnings reported in the period from 20 March to 30 October 2020 can be claimed, 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.

With the ability to flexi-furlough being in place from 1 November 2020 this will be more attractive to such directors, but we still face the conundrum of trying to be able to evidence usual hours to support the claim.

Usual hours

For previously eligible employees the usual hours remain as per the calculation for CJRS.2 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 CJRS.3

The usual hours are based on calendar days in the claim period.

Claim deadline

One of the most concerning differences from the CJRS.2 is the fact that claims for the prior month have to be made by the 14th day of the following month. Thus, claims up to 30 November have to be claimed by 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 14th of each month.

Claims will be able to be made in advance (I assume as now 14 days before payday) and will pay out 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. 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 JSS, but employers using the scheme will be named.

Rehires

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

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 2020, but as the new guidance is promised on 10 November this could be challenging.

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 in the claims. This should be okay as long as it’s preceded or followed by a seven day period of furlough.

Schemes scrapped

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

What hasn’t changed from CJRS.1 and CJRS.2?

  • All employment rights continue during furlough, eg 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 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 furlough 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

Any Answers Live

Replies (33)

Please login or register to join the discussion.

Routemaster image
By tom123
06th Nov 2020 15:49

Hi Kate,

Is it possible to be on furlough and on holiday at the same time? Or has that changed.

Thanks (0)
Replying to tom123:
avatar
By Paul Crowley
09th Nov 2020 10:19

Good question
To be reasonable to employers it should be.
If no action taken there will be employers that owe an entire year of holiday pay on an employee who has not worked for an entire year.

Thanks (0)
avatar
By JHC
07th Nov 2020 13:32

CJRS1 seems a long time ago now. To check, someone who was employed, fixed salary, but was still working so didn't claim, will be classed as an eligible employee for CJRS1? So their reference salary will be February 2020 rather than the new updated reference dates. They had a pay rise in September, so assume this won't be taken into account?

Thanks (0)
By ireallyshouldknowthisbut
08th Nov 2020 18:05

So if you have an annual directors scheme on call it £9k for 19/20, reported on 20th March.
Then you switch to monthly PAYE for April through to October, at a rate of £750/month for 7 months.

What is the reference salary?

is it simply £750/month being the October PAYE?
Is it £14,250 divided by 8 (or may be 7) pay periods, so £1,781? Or over 19 months so back to £750?

How about if you have £9k for a 20th March payroll, ran April & May salary with £500 in, then nothing but blanks since? Are we averaging £10k over 3 pay periods, so a reference salary of £3,333? Or perhaps 14 months, so £714, or 19 month to October, so £526?

The legislation is going to be key here and could throw out some odd results given directors payroll tends to be anything but regular.

Thanks (0)
Replying to ireallyshouldknowthisbut:
blue sheep
By NH
09th Nov 2020 06:11

according to what we have so far it depends on whether they have previously been furloughed or not - if they have, the reference pay is the same as it always was, if not the reference pay is the October salary or average if variable

Thanks (1)
Replying to NH:
By ireallyshouldknowthisbut
09th Nov 2020 08:57

@NH, I was assuming in my example no previous furlough, as you say or it would be Oct salary.

The question I have is "which average exactly?"

Thanks (0)
Replying to ireallyshouldknowthisbut:
By Duggimon
09th Nov 2020 10:05

Fixed salary - October amount is the reference
Variable salary - the average from April to October.

So in your £500 a month it'd be (£500 + £500) / 7 or £142.86

At least that's my thoughts on it so far, please someone correct me if I'm wrong.

Thanks (0)
Replying to NH:
avatar
By kathyk0410
09th Nov 2020 10:18

Think it is based on eligibility rather than whether they were furloughed - however it shouldn't make a difference to annual directors as they weren't eligible.

Thanks (0)
Replying to kathyk0410:
avatar
By stuartb
11th Nov 2020 07:11

Why do you say annual directors were not eligible? If they had an RTI submission between 6 April 2019 and 19 Match 2020, surely they were?

Thanks (0)
Replying to kathyk0410:
avatar
By stuartb
11th Nov 2020 07:11

Why do you say annual directors were not eligible? If they had an RTI submission between 6 April 2019 and 19 Match 2020, surely they were?

Thanks (0)
Replying to stuartb:
Morph
By kevinringer
11th Nov 2020 07:54

I have an annual director RTI'd 16 March and HMRC have accepted furlough claims.

Thanks (0)
Replying to kevinringer:
avatar
By stuartb
13th Nov 2020 07:54

Thanks for confirming. I wonder if I've misunderstood the point kathyk0410 was trying to make.

P.s. sorry about the duplicate comment above. Don't know how it happened nor how to delete.

Thanks (0)
Replying to ireallyshouldknowthisbut:
avatar
By JHC
09th Nov 2020 10:25

I would say £750 the reference salary if paid that rate from April to October.

If paid only in April and May, then who knows!! It would appear that they fall under the variable pay banner (but in the guidance so far it says "employed after 20th March) so it's obviously expecting this section to relate to new starters only and not those who simply had RTI filed after the 19/3 RTI cutoff date. Wonder if it will be "the higher of" scenario again.

Thanks (0)
Replying to JHC:
By ireallyshouldknowthisbut
09th Nov 2020 11:51

Its a muddle all right.

The references to 20th March for eligibility and then periods April to October for the computation seem to be contradictory. If for example you had an annual pay period of 30th March, and then nothing since, then what?

Thanks (0)
avatar
By remhonps
09th Nov 2020 10:00

What about staff transferred on TUPE to new employer after 1st November? Can new employer furlough?

Thanks (0)
avatar
By remhonps
09th Nov 2020 10:02

What about staff transferred on TUPE to new employer after 1st November? Can new employer continue to furlough?

Thanks (0)
Replying to remhonps:
By Duggimon
09th Nov 2020 10:06

That's how it worked last time, I'm assuming for now that nothing that hasn't been specifically mentioned in the new guidance has changed.

Thanks (0)
avatar
By petestar1969
09th Nov 2020 10:31

The £1,000 job retention bonus has been scrapped and anyone made redundant after 23 September can be re-hired and immediately furloughed?

So, the two reasons for this change?

Presumably the Chancellor's forecast of how much the £1,000 bonuses would cost is less than furlough? Its not like the government's forecasts/predictions to ever be miles out is it?

The main reason for the change though is obviously to fiddle the unemployment figures.....

Thanks (1)
Replying to petestar1969:
blue sheep
By NH
09th Nov 2020 10:44

petestar1969 wrote:

The £1,000 job retention bonus has been scrapped and anyone made redundant after 23 September can be re-hired and immediately furloughed?

The main reason for the change though is obviously to fiddle the unemployment figures.....

Yes its a strange one that, as it happens I know someone in this position, was made redundant end of October, can now be taken back on just to get furlough, and they will without a doubt be made redundant again in March or whenever the CJRS V3 actually ends!
Good news for them as they will now be paid almost a full time wage to do nothing at all for 5 more months!

Thanks (1)
Replying to NH:
avatar
By petestar1969
09th Nov 2020 10:49

And I wouldn't be surprised if your friend's ultimate redundancy in March next year were spun and blamed on Brexit....Call me a cynic, I won't disagree.

Thanks (0)
Replying to petestar1969:
Morph
By kevinringer
09th Nov 2020 13:07

The Government supports Brexit so I can't see them blaming it.

Thanks (2)
avatar
By Homeworker
09th Nov 2020 10:36

Can an employee due to start maternity leave soon postpone this and take furlough now and SMP later?

Thanks (0)
Replying to Homeworker:
My photo
By Matrix
10th Nov 2020 19:19

Biology may prevent it though.

Thanks (0)
avatar
By AndrewV12
09th Nov 2020 10:37

Extract above
'Claim deadline
One of the most concerning differences from the CJRS.2 is the fact that claims for the prior month have to be made by the 14th day of the following month. Thus, claims up to 30 November have to be claimed by 14 December.'

Lets all be sure we don't forget the above. One for the diary

Thanks (0)
By cfield
09th Nov 2020 10:51

Shame about them scrapping the Job Retention Bonus. I knew that £1,000 was too good to be true. Trouble is, I've already told my eligible clients about it, so now I've got to un-tell them. It's getting to the point now where anything they announce in advance has to be taken with a pinch of salt. A new twist on What If analysis.

Thanks (1)
Replying to cfield:
Morph
By kevinringer
09th Nov 2020 13:12

I've been sending newsletters to my clients: currently compiling covid newsletter number 35! I sent one on 1 November after the PM's announcement, much of which then changed when the Chancellor spoke 5 days later. I'd spent much of the last week of October doing JSS planning with clients, all of which turned out to be a waste of time, but not that we knew it at the time. And that's the point: we can't predict and can only communicate to our clients what is known. We're all having to get used to huge changes happening with no notice: us, clients, even HMRC.

Thanks (0)
avatar
By User__Name
09th Nov 2020 14:19

We have a seasonal retail business and furloughed everyone on the payroll in March, beinging them back when we reopened in May. Now we have to furlough again but I cam concerned that some that had worked restricted hours for us before March and were furloughed at a low reference pay and then took on increased hours over the summer will be given a low furlough pay compared to those that joined since we reopened.

I cannot find much on the allowed calculation basis for this situation.

Thanks (0)
avatar
By 3el Nd
09th Nov 2020 14:48

I cant believe the Job retention scheme has now beeen scrapped.

Correct me if im wrong but wasnt the bonus an incentive for Emp'ers to keep furloughed staff on where as they would have been made redundant??
So, employers that kept staff in their jobs were having to add to the 70% in Sept and 60% in Oct to make 80% as well as paying towards employees NICs and Pensions, now to be told to forget about the bonus, but thanks for keeping unemployment numbers down.

Im sure alot of them will not be happy now the scheme as been stamped out.

Thanks (0)
Replying to 3el Nd:
Morph
By kevinringer
09th Nov 2020 16:59

Exactly. I've got an employer who has kept on a member of staff: there isn't really enough work for that employee's role but the employer decided to keep them on the books because the £1000 would pay for the shortfall. Of course, that employer now has the option to part-time furlough which didn't exist previously and this is likely to pay out more than £1000 between now and January.

The employers that are going to lose out are those with employees back to normal hours for whom the CJRS bonus really was going to be a bonus. I've got one client with 12 staff all back in full time working. That employer was looking forward to their £12k bonus. But what can the employer do? It's just another Government failed promise. And to be fair to the employer, they're glad their business (construction) is now back 100% and they don't have any of the worries so many other businesses have and consider the loss of £12k a small price to pay to still be in business.

Thanks (0)
avatar
By slm09
11th Nov 2020 13:54

Hi there,
I'm pretty sure i know the answer to this but wanted to sense check.
We have 2 employees, employed before March, who haven't, to date, been on furlough. They've both taken a pay cut in recent months and are now going on to flexi furlough.
Can I use their new monthly salary as a reference salary or will a claim be based on their pre-covid pay?

Thanks (0)
By birdman
11th Nov 2020 22:41

Hi Kate

I have a client who (don't ask why) purchased an existing business on 2 Nov, employees retained (TUPE rules applied). I assume furloughing won't be possible due to PAYE Scheme not even existing on cut-off date, but are there any applicable exceptions please?

Thanks (0)
avatar
By Dream Baby
19th Nov 2020 09:34

'Employers will still be liable for employer’s NIC and pension contributions for any unworked hours.'
Does this mean what is appears to say, that a company which flexibly furloughs employees still has to pay the er NI and er pension contributions it would normally pay for the flexibly-furloughed employees? Paying er NI and er pension on the worked hours is fair enough but on the unworked hours as well?

Thanks (0)
Replying to Dream Baby:
Morph
By kevinringer
19th Nov 2020 14:33

Yes, that's been the case since August. For September and October the employer also had to pay some of the furloughed pay (10% and 20%) but November we're back to where we were in August paying er NI and er pension contributions only.

Thanks (0)