On 31 October 2020, the very day that the Coronavirus Job Retention Scheme (CJRS) was due to end, the government announced it would be extended to provide support to employers and workers during the further lockdown.
Businesses in England in non-essential retail, leisure and entertainment as well as the hospitality sector will be required to close for a month from 5 November until 2 December 2020. The government also announced an extension to the Self Employment Income Support Scheme (SEISS). In this this article we look at the extensions to both schemes in relation to what we know so far.
Extension to the CJRS
The CJRS, as it applied in August, will continue to apply for another month from 1 November until 2 December 2020. Consequently, employers can retain workers on their payroll and put them on furlough provided there has been suitable individual notification and acceptance or a collective agreement has been entered into with a recognised trade union that provides for this. Employers can claim a grant to reimburse up to 80 per cent of a furloughed employee’s wage costs up to a maximum of £2,500 gross per month which must be paid to the worker.
Employers will also be required to pay National Insurance Contributions (NICs) and pension contributions. They can still top up workers’ wages above the scheme grant.
Employers who can remain open during the lockdown will also be able to flexibly furlough employees so workers can spend some time at work and some time on furlough. In order for this to happen employers and workers will need to agree the shift pattern which the worker will undertake and the worker will be entitled to be paid their normal wages for the work undertaken which must be paid by the employer. The employer will still be able to claim the CJRS grant for the days that the worker is not working when he or she would ordinarily have done so.
Key points of the extended CJRS
The extended CJRS will be available to all workers who were on the employer’s PAYE payroll and whom the employer notified to HMRC through Real Time Information (RTI) on 30 October 2020.
There is no requirement that the worker has to have previously been furloughed under the CJRS.
According to a government economic support update those employees who were employed and notified to HMRC by RTI on or before 23 September 2020 and who have since been made redundant can be rehired and placed on the CJRS. While welcome, in practice employers are likely to be reluctant to rehire because the extension to the CJRS is for just one month.
The furlough pay will be calculated by reference to the worker’s usual hours and will, according to the government’s website, broadly follow the same methodology as applied under the CJRS. Further details are awaited.
When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period that covers seven consecutive calendar days. They will also need to report the hours worked and the usual hours a worker would be expected to work in a claim period.
The government has confirmed there will be no gap in eligibility for support between the previously announced end-date of CJRS and the extension. Employers will be paid upfront to cover the wage costs. The government is expected to announce when employers’ claims can first be made in respect of workers’ wage costs during November.
Further guidance on the extension to the CJRS will, we understand, be issued by the government shortly.
Extension to the SEISS
The extension to the SEISS will last for six months from November 2020 to April 2021.
To be eligible for the extension self-employed individuals, including members of partnerships, must:
- Have previously been eligible for the SEISS first and second grant (although they do not have to have actually claimed the previous grants)
- Declare that they intend to continue to trade and either:
- Currently actively trading but are impacted by reduced demand due to coronavirus
- Were previously trading but are temporarily unable to do so due to coronavirus.
The SEISS grant will be paid in two lump sum instalments each covering a three-month period, the first covering the period from 1 November 2020 until 31 January 2021.
The government will provide a taxable grant covering 55 per cent of average monthly trading profits, paid out in a single instalment covering three months, and capped at £5,160 in total.
The grant is calculated on the basis of 80 per cent of average trading points for the month of November together with a grant of 40 per cent of average trading profits for each of the months of December and January.
Claims under the extended SEISS can be made from 30 November.
Key point of the extended SEISS
The government states that it is providing broadly the same level of support for the self-employed as for workers under the extended CJRS for the month of November. However, that is not strictly true.
Unlike the extended CJRS, which is not restricted to those who have previously been furloughed, the extension to the SEISS is limited to those who were previously eligible to claim. By limiting the scheme in this way thousands of people who are self-employed, such as those who became self-employed from April this year, sole directors working through a limited personal service company and freelancers, remain excluded from the scheme and face a harsh winter.
The extension to the CJRS comes far too late to save the jobs of those who have already been made redundant due to the government maintaining right up until the last day that the scheme would close on 31 October 2020.
Unions will want to secure an extension to the furlough agreements already in place to protect their members in November and ensure where the employer has agreed to top up the wages of workers that they continue to do so.
Given that government ministers are already indicating that the lockdown may last for more than a month, the government should make clear now that the CJRS will be extended. This would give employers and workers greater security at a time when they really need it.
The extension to the SEISS should be reviewed immediately as previously recommended by the Treasury Select Committee to provide support to the thousands of self-employed workers who have, for so long, been excluded.
You can read the government summary of the extension to the CJRS in full here.
You can read the government summary of the SEISS in full here.
Articles shared by Thompsons relating to coronavirus (COVID-19) are correct at the time of publication. You should check the government's guidelines for the latest information and advice at https://www.gov.uk/coronavirus.