The government’s Coronavirus Job Retention Scheme (CJRS) is designed to help employers if they cannot cover staff costs due to coronavirus. Its aim is to avoid redundancies, and the scheme can offer grants of up to 80% of an employee’s wage, up to a cap of £2,500 per month.

The scheme has covered salaries from March 1, 2020. There was an announcement in March 2021 that changes will be introduced. The Scheme will now run until 30 September 2021, although there will be changes as it progresses.

If the business you work for applies for CJRS, they will designate some or all of their employees as ‘furloughed workers,’ and will need to notify employees of this change. You will still need to consent to being furloughed. They will have to submit information through an HMRC portal to apply for reimbursement.
However, changing the status of employees when applying for CJRS remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
If your employer tries to change the terms of your contract or any other status of your employment while designating you a ‘furloughed worker’ you should get advice.

Changes to the CJRS Scheme

The Government announced a number of changes to the scheme in early March 2021. This is the fourth time the scheme has been extended.

  • If you are currently furloughed the scheme would continue
  • You can work part time and be furloughed part time. Your employer should pay you your normal wages for the hours that you work.
  • The employer will recover furlough pay from the state but will have to pay pension and national insurance costs up until 30 June 2021. From 1 July 2021 the employer will recover 70% of furlough pay. From 1 August 2021 the employer will only recover 60% of furlough pay, However, employees should continue to get the same amount, i.e. 80%.

What does it mean if I am designated a ‘furloughed worker’?

This would mean that you are kept on your employer’s payroll, rather than being made redundant. You should not undertake work for them while you are furloughed.

Your employer will claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month, subject to the changes outlined above. You will remain employed while furloughed but you should not be undertaking work. Your employer could choose to fund the differences between this payment and your salary, but does not have to.

There is provision to be part furloughed and part employed by the same employer (see below).

You can work for another employer while furloughed (as long as your contract does not prevent this) or carry out voluntary work.

If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.

Will I have to pay tax on income from CJRS?

Yes – individuals will pay Income Tax and National Insurance on any payments received through this scheme as they are replacement for income in line with normal practice for benefits or grants that replace income.

Will this cover the cost of employer National Insurance contributions and employer pension contributions?

The employer will recover furlough pay from the state but will have to pay pension and national insurance costs up until 30 June 2021. From 1 July 2021, the employer will recover 70% of furlough pay and will have to pay 10%.

From 1 August 2021, the employer will only recover 60% of furlough pay, and will have to pay 20%. However, employees should continue to get the same amount i.e. 80%.

What businesses are eligible for this scheme?

All UK businesses are eligible, this includes:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities

The scheme is open to all UK employers that created and started a PAYE payroll scheme on/before 19 March 2020 and have a UK bank account.

What workers are covered by this scheme?

The CJRS definitely applies to anyone employed through the PAYE system regardless of their employment contract. This can mean salaried employees, those on flexible or zero-hours contracts and agency workers. The scheme can cover part time or full time staff.

The scheme does not apply to self-employed people or contractors – see the section below for the support available to the self employed.

Can you be paid less than the National Minimum Wage (NMW) when placed on furlough at 80%?

Yes, you can. The NMW is payable as long as you are working or training as required by your employer. The rates increase on the 1 April 2021.

Please note that the National Living Wage for those age 25 and upwards will be payable from age 23 upwards from 1 April 2021.

There is more information available on the NMW on the Acas website here.

How does this work for those on zero-hour/flexible contracts/agency workers?

This scheme aims to support all those employed through the PAYE system regardless of their employment contract, including those on zero-hour contracts.

Zero-hour and flexible contracts can cover a whole range of working arrangements, and the 80% grant is applied to whichever is higher:

  • The earnings in the same pay period in the previous year; or
  • The average earnings in the whole previous 12 months (or fewer if they have worked for less time than this, including a part month calculation if they were taken in February 2020).

Can I be furloughed for a short period of time, e.g. a week or a couple of days, and then re-employed?

There is no limit on the number of hours that you can work. If you have a contract for 37 hours, you could work for 30 hours and be furloughed for the remaining 7 hours. This arrangement can be varied from week to week. You should be paid at your normal rate for the hours that you do work.

For any furlough claims up until 30 April 2021, you need to have been on your employers PAYE payroll on or before 30 October 2020 to be eligible. This means that your employer must have made a Real Time information payroll submission to HMRC on your behalf on or before 30 October 2020.

For any furlough claims from the 1st May 2021 until the end of September 2021, you need to have been on your employers PAYE payroll on or before 2nd March 2021 to be eligible. This means that your employer must have made a Real Time information payroll submission to HMRC on your behalf on or before 2nd March 2021.

You can be furloughed, come off furlough and be furloughed again.

What if I have already been made redundant?

If you were on the payroll on 23 September 2020 and were made redundant after that date (or left voluntarily) you can be rehired and placed on furlough. The decision is the employers to make, there is no obligation on them to do so. There may be a cost to the employer as they will need to pay the employers National Insurance and pension contributions. It may be worth asking them to do so.
If you have been made redundant and your employer has not offered to reinstate you and designate you a furloughed worker, you should get legal advice.

For any furlough claims up until 30 April 2021 you need to have been employed on or before 30 October 2020 to be eligible. This means that your employer must have made a Real Time information payroll submission to HMRC on your behalf on or before 30 October 2020.

Can my employer sack me while I’m on furlough? Is my employer allowed to sack me as soon as the furlough scheme comes to an end?

Yes, you can still be made redundant while on furlough or immediately after. There is no requirement to bring the employee back to work after the period of furlough. If an employee is made redundant during the period of furlough then grant payments will cease.

However, in both cases normal redundancy rules and protections will apply. Where a business feels that redundancy is the only option, this must still follow the rules which include giving a notice period and consulting staff before a final decision is reached. More information on redundancy can be found here.

If the CJRS is deemed a reasonable alternative to dismissal, there could be grounds for an unfair dismissal case, but again, this remains unclear for the time being.
If you have been made redundant you should legal advice.

My employer has reduced my hours but has not designated me a ‘furloughed worker’, does this scheme apply to me?

No, if you are still undertaking work for your employer – even if your hours are reduced – you are not eligible for the CJRS scheme. However, see above for part work and part furlough.

If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.

Do my holidays continue to accrue while I am on furlough?

Yes, they do in the same way as if you were working. It is now possible for employers to allow workers to carry forward accrued but untaken leave to the following two years.

Does my employer have to continue to pay in to my auto-enrolment pension scheme while I am on furlough?

Yes, they do. Deductions will also be made from your pay as your contribution to the pension scheme.

I am on Statutory Sick Pay, can my employer change me to a ‘furloughed worker’?

Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this. Employees who are shielding in line with public health guidance can be placed on furlough.

If your employer currently has you on SSP, there is no reason you should not be moved to ‘furloughed’ status. If your employer does not approach you about designating you a ‘furloughed worker’ ask them about the scheme and your applicability.

I have more than one job, how does that work?

If you have more than one job, you can be furloughed by one or more of your employers. Each job is separate, and the cap applies to each employer individually.

How will my employer decide which workers to furlough?

It is essentially up to your employer which employees are furloughed and which continue working. Any decision to furlough a worker must be consented to by the worker, and equality and discrimination laws still apply to any decisions your employer is making.

Can I make my employer furlough me?

Your employer doesn’t have to furlough you, but you can ask them why they’ve said no and ask if they’ll change their decision. Check if they’ve seen the guidance for employers on GOV.UK. It explains who can be furloughed under the rules of the scheme.

If you look after someone and can’t be furloughed, you can check what to do if you need to be off work to care for someone.

If you feel that the decision to furlough certain workers and not others did not comply with equality and discrimination laws, you should get legal advice.

I am on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay – does this apply to me?

Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth.

If you are eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and you are entitled to claim up to 39 weeks of statutory pay or allowance.

If you qualify for SMP, you will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently £151.20 a week, rising to £151.97 a week from 4th April 2021.

If your employer offers you enhanced (earnings related) contractual pay on Maternity Leave, this is included as wage costs that you can claim through the scheme. The same principles apply if you qualify for contractual adoption, paternity or shared parental pay.

Further information is available on maternity rights see maternityaction.org.uk

Further information on the furlough scheme is available from ACAS
Tel: 0300 123 1100
https://www.acas.org.uk/advice

Can I get help if I am self-employed?

If your business has been affected by coronavirus you might be able to get money from the government, for example if you’ve:

  • lost out on income; or
  • had to stop working to look after someone.

If you’re eligible, you can get money to cover lost income for 3 months. You won’t have to pay the money back, but you’ll have to pay tax on it.

You could get 80% of your average profits up to a maximum of £2,500 per month from the government. This is called the Self-employment Income Support Scheme.

Check if you can use the Self-employment Income Support Scheme

You can use the scheme if you’re self-employed or a member of a partnership.

Your self-employed profits must not be more than £50,000 per year and they must make up at least half of your total income. The government will look at your tax returns to see if you’re eligible – if you’re not sure you can check the rules on GOV.UK.

To work out your eligibility, HMRC will first look at your 2019 to 2020 Self Assessment tax return. If you’re not eligible based on your 2019 to 2020 Self Assessment tax return, we will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.

You must also have traded in both tax years:

  • 2019 to 2020 and submitted your tax return by 2 March 2021
  • 2020 to 2021

You must either:

  • be currently trading but are impacted by reduced demand due to coronavirus
  • have been trading but are temporarily unable to do so due to coronavirus

You must also declare that:

  • you intend to continue to trade
  • you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus

You can find out more about the scheme from Febuary 2021 onwards on GOV.UK here. The UK government has announced that there will be a fifth and final grant covering May 2021 to September 2021.

How much will I get and how do I make a claim?

HMRC will calculate how much you should get based on your self-employed profits. You’ll get one payment to cover the whole length of the scheme. You can apply for the scheme on GOV.UK. If HMRC accept your application, they say they’ll pay you within 6 working days.

Getting Advice

ACAS Helpline: 0300 123 1100

Email: employment@gmlaw.org.uk

Contact: reception@gmlaw.org.uk or call  0161 769 2244

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