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New national measures, announced by the government on Saturday 31st October, aimed at controlling the spread of COVID-19, will once again force many parts of the economy to shut down for a period of at least 1 month.

To support businesses during this time and beyond, the Chancellor, Rishi Sunak, has confirmed that the Coronavirus Job Retention Scheme (CJRS) will be extended until March 2021 and that until January 2021 at least it will revert to its original funding level of up to 80% of wages for hours not worked subject to a cap of £2,500.

Businesses will retain the flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time, and initially will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs.

In January there will be a review to establish whether economic conditions are such that employers can be asked to contribute to a higher level.

Under previous arrangements the CJRS had been scaled back to pay 60% of hours not worked and was due to end completely at the end of October to be replaced by the Job Support Scheme (JSS) which will require a greater proportion of wages to be paid by the employer. Introduction of the JSS will now be delayed.

Previously, the government had announced the Job Retention Bonus scheme, which was due to pay employers £1,000 for every employee , who had previously been furloughed, and who was retained in employment until 31 January 2021.  This scheme will be withdrawn and an alternative will potentially be launched at a later date.

The following summarises the main eligibility and payment terms of the most recent edition of the CJRS:

  • Any employer with a UK bank account and PAYE scheme is eligible to claim a grant under the scheme 
  • Public sector employers are not expected to use the scheme
  • Employees must have been on payroll and included on an HMRC RTI submission on or before 30 October 2020 and have a UK bank account to be eligible
  • Employees can be on any type of employment contract
  • Employees can continue to work reduced hours – the CJRS will be applied to hours not worked
  • Claims can only be made for employees who are furloughed for a minimum of 7 consecutive days
  • Neither the employer nor the employee needs to have previously used the CJRS in order to make a claim for the December scheme
  • Claims from the CJRS will cover 80% of wages for hours not worked by the employee up to a cap of £2,500.  The £2,500 cap is proportional to the hours not worked
  • Grants claimed must be paid to the employee in full
  • Employers choose to top up employee wages above the scheme grant at their own expense
  • The employer is required to pay wages at the employees contractual rate for the hours worked and employer national insurance and pension contributions.