Introduction
The Chancellor of the Exchequer announced in the Budget on 3 March 2021 that the Coronavirus Job Retention Scheme (CJRS), also known as the furlough scheme, will be extended for a further five months until 30 September 2021. In broad terms the operation of the CJRS will continue unchanged and both full and flexible furloughing will continue to be possible. However, employers will now be required to contribute - 10% in relation to July and August 2021 and 20% in relation to September 2021 – to workers’ furlough pay for the hours they do not work whilst also remaining responsible for the associated employer’s national insurance and pension contributions.
Key points
The key points to note about the extension of the CJRS are as follows:
- The CJRS remains available, as confirmed by the relevant Treasury Direction for those whose "employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission."
- The categories of employees and others in respect of whom claims can be made under the CJRS will remain unchanged.
- Until the end of the CJRS those workers who are furloughed in accordance with its terms will continue to receive 80% of their wages for hours they do not work up to the cap of £2,500 per month.
- Until the end of June 2021, the Government will continue to reimburse employers in full in respect of the current 80% grant for unworked hours up to the cap of £2,500 per month.
- From July 2021, the level of grant will be reduced each month and employers will be asked to contribute towards the cost of furloughed workers’ wages. The contribution required will be 10% of wages for hours not worked in July and August 2021, rising to 20% in respect of September 2021.
- Employers will continue to pay employer’s national insurance and pension contributions in respect of their workers’ furlough pay as they do under the current terms of the CJRS.
- It will still be a requirement of the CJRS that workers in respect of whom claims are made must not work or provide any services for their employer during the hours for which they are furloughed.
- As is currently the case, to be eligible for reimbursement under the CJRS, employers must continue to pay furloughed workers at least 80% of their wages, up to a cap of £2,500 per month, for the time they spend on furlough. Employers may continue to choose, at their own expense, to top up furloughed workers’ wages beyond this level of reimbursement.
- The Government has produced the following table showing, for the five month period for which the CJRS is being extended, the level of Government grant available, the level of employer contribution required and the amount that a worker will receive. Wage caps are proportional to the hours not worked.
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May
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June
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July
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August
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September
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Government contribution: wages for hours not worked
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80% up to £2,500
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80% up to £2,500
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70% up to £2,187.50
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60% up to £1,875
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60% up to £1,875
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Employer contribution: employer National Insurance contributions and pension contributions
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Yes
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Yes
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Yes
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Yes
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Yes
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Employer contribution wages for hours not worked
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No
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No
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10% up to £312.50
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20% up to £625
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20% up to £625
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For hours not worked employee receives
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80% up to £2,500 per month
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80% up to £2,500 per month
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80% up to £2,500 per month
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80% up to £2,500 per month
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80% up to £2,500 per month
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Details of workers in respect of whom claims may be made from 1 May 2021 onwards
- From 1 May 2021 onwards, employers can claim grants under the CJRS for workers who were employed on 2 March 2021, as long as the employer has made a PAYE Real Time Information (RTI) submission to HMRC in respect of that worker between 20 March 2020 and 2 March 2021. The employer will not need to have previously claimed for an employee before 2 March 2021 to be able to claim for periods starting on or after 1 May 2021. For claim periods ending on or before 30 April 2021, employers can still claim for employees who were employed on 30 October 2020, as long as they have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
- Under the CJRS, where a worker is engaged on a fixed term contract which has not already expired, it can be extended or renewed and the individual placed on furlough. For claim periods on or after 1 May 2021, an employer may put a fixed term contract worker on furlough provided they were employed on 2 March 2021.
- Details of how employers should calculate their claims under the CJRS for periods starting on or after 1 May 2021 will be provided in updated guidance in due course.
- Under the CJRS, employers may claim furlough grants for employees who transferred from another employer following a TUPE transfer or change of ownership. For periods from 1 May 2021 onwards employers can claim under CJRS for an employee who was transferred from another business if they were included on a PAYE RTI submission to HMRC on or before 2 March 2021. Specific rules apply where employees whose employer has changed were not on the relevant payroll on or before 2 March 2021.
Links to the updated Government guidance
