We have all become aware of the Coronavirus Job Retention Scheme (CJRS), otherwise known as furlough, and business owners will be pleased to know that this has been extended from the 1st November 2020 to 31st March 2021.
What Does The Extended Furlough Mean For Employers?
Due to the second national lockdown, for the first time in three months, business owners are now able to reclaim 80% of their employees ‘reference pay’. This covers the time that their staff are not working and allows for flexible furloughing, such as switching to part-time. However, they must still pay all of their employer’s NIC (National Insurance Contributions) and employer’s pension contributions. Employers should also only use this scheme if their business has been directly impacted by COVID-19 to the point that they cannot pay their employees. For instance, retail stores, which have been forced to close to comply with lockdown restrictions.
How Is The Extended Furlough Calculated?
To keep the scheme as straightforward as possible, the Government is allowing employers to calculate furlough pay the same way that they did up to August 2020. Employees will still be given 80% of their ‘reference pay’.
Where the furloughed employee was put on the payroll on the 19th Match 2020, their ‘reference pay’ will be based on their pay in the last period before that date. For any employees that joined the payroll after 19th Match 2020, their ‘reference pay’ will be based on their last pay period ending before 30th October 2020. If there are any employees who are paid the national minimum wage, they may find that their furlough pay slightly differs based on whether they joined the company before or after the 19th March 2020.
In order to claim the extended furlough, employers must ensure that they submit their claim under CJRS within 14 days of the end of the calendar month that the claim relates to.