The coronavirus job retention scheme (CJRS) has been extended from 1 November 2020 to 31 March 2021.
For the first three months, employers can reclaim 80% of their employees’ ‘reference pay’ for the time they are not working, although they must pay all of the employer’s national insurance contributions (NIC) and any employer’s pension contributions due on the wages paid.
The extended furlough scheme allows flexible furloughing so employees may be asked to work part time or certain weeks on and off, but employers should only use the scheme where the business has been affected by Covid-19 to such an extent that it is not possible to pay the employees. This would apply, for example, where the business premises are required to close or partially close under the lockdown rules.
To keep things simple, the Government has allowed employers to calculate furlough pay in the same way as they did up to August 2020; as 80% of ‘reference pay’.
Where the furloughed employee was on the payroll on 19 March 2020 the ‘reference pay’ is their pay in the last period ending before that date. If the employee has joined the payroll since 19 March, their ‘reference pay’ is their pay in the last pay period ending on or before 30 October 2020.
This approach does throw up anomalies as the ‘reference pay’ for long-serving employees ignores any pay increases made since March 2020.
Employees paid the national minimum wage may find that they receive different amounts of furlough pay depending on whether they were taken on by the employer before or after 19 March 2020.
Claims under CJRS must be submitted within 14 days of the end of the calendar month to which the claim relates, so by 14 December 2020 for claims relating to pay for November.
