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Education briefing - Updated guidance published on the extended Coronavirus Job Retention Scheme

  • United Kingdom
  • Education - Briefings
  • Education - Coronavirus

25-11-2020

In our briefing of 3 November we referred to the UK Government’s announcement of the extension to the Coronavirus Job Retention Scheme (“CJRS”), initially until 2 December 2020. In that briefing we stated that a further extension of CJRS could not be ruled out. Since then, of course, the Government has announced a further extension until 31 March 2021, has updated the guidance on the extended CJRS (the Guidance) on 4 occasions and on 13 November 2020 published a Treasury Direction.

In addition, the Government has postponed indefinitely the launch of the wage subsidy scheme which was intended to replace the CJRS (the Job Support Scheme) and cancelled the Job Retention Bonus.

It should be noted the latest Guidance applies until the end of January, reflecting a Government commitment to review the policy to decide “whether economic circumstances are improving enough to ask employers to contribute more” from February. At the moment the Government will pay 80% of an employee’s regular wage, up to the value of £2,500, whilst the employer is responsible for employer NICs and pension costs (plus any salary top up it agrees to make).

In this briefing, we highlight significant aspects of the updated content.

Before doing so it is worth mentioning that there is no change to the position that the Government expects publicly funded organisations not to use the CJRS. The Guidance states:

• If you have staff costs that are publicly funded (even if you’re not in the public sector), you should use that money to continue paying your staff, and not furlough your staff.

• Organisations can use the scheme if they are not fully funded by public grants and they should contact their sponsor department or respective administration for further guidance.

In our briefing of 7 April 2020 we considered the extent to which the CJRS applied to education institutions – in summary our view is:

• an HEI can in principle use the Scheme but should do so only a) where it can show a significant operational impact from COVID19 that prevents the relevant staff group from working (or working their usual hours in full), and b) that it has considered the contents of the CJRS guidance (including that issued by the DfE) and the extent to which the wage costs that might be claimed are already attributable (to any significant extent) to public funding and c) that it has made its decisions on a considered basis, applying principles of good governance, and ensuring that there is a clear and defensible rationale for the decision.

• in relation to general FE colleges, our view is that in most cases the application of the Scheme will be limited but it could apply to those areas of colleges’ services for which public funding will be impacted – in particular the apprenticeship training provision and trading income where activities have ceased or reduced as a result of CV19.

• as far as public sixth-form colleges and schools/academies are concerned, given the wording of the guidance, it is likely that there will be very limited opportunities to use the Scheme.

Updated guidance: points to note

Much of the Guidance will be familiar to institutions. For example, as under the CJRS rules which applied until the end of October, eligible employees can be on any type of employment contract, the employer can furlough employees on a full-time or flexible, part-time basis in agreement with the employee and there are restrictions on furloughed employees doing any work for their employer.

The main points of difference in the Guidance, compared with the original, is that it reflects the extension of CJRS to employees who started work during the pandemic and to employers who have not previously accessed CJRS grants, such as new payroll cut-off dates. There are also important changes, such as a restriction on employers using CJRS grants during periods of notice and the publication of the names of employers who claim under the CJRS.

The points below relate to the extended CJRS as it applies from 1 November as reflected in the latest Guidance (and not to claims for periods ending on or before 31 October):

Employee agreement: Any changes to the employment contract need to be made by agreement and employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. Whilst employers may retrospectively agree furlough agreements with employees backdated to 1 November 2020, for the purposes of a CJRS claim, this ability to claim retrospectively only applies if such agreements were in place before 14 November 2020.

Managing the transition: The Guidance applies for CJRS claims for periods starting on or after 1 November 2020 (the closing date for claims up to and including 31 October remains 30 November 2020, using the previous CJRS guidance). Employers can claim under the extended CJRS from 11 November 2020 and, therefore, the claim for the period from 1-11 November will be in arrears. Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month claimed for (if this time falls on the weekend then claims should be submitted on the next working day).

Devolved nations/tier status: Claims can be made by employers that meet the CJRS eligibility criteria. This is irrespective of the different coronavirus restrictions which may apply beyond the current English lockdown, such as a return to the three tier approach in England and any further firebreak in Wales.

Employee eligibility: Employees must have been employed on 30 October 2020, and the employer must have made a PAYE Real Time Information (RTI) submission to HMRC for them between the 20 March 2020 and 30 October 2020. Previously, claims could only be made for employees who had been furloughed before 30 June 2020 and a claim submitted by 31 July 2020 and a maximum employee number applied (with some exceptions).

Employer eligibility: A key difference is that employers do not need to have used CJRS previously with the result that some employers may be using extended CJRS for the first time. Other eligibility criteria apply.

Pay data: How to calculate claims, including working out employees hours and pay across reference periods, will be familiar to those employers already using CJRS. However, for new employers claiming and new employees hired between 20 March 2020 and 30 October 2020 the Guidance has updated the reference pay and usual hours to take account of the period covered by the extension. A calculator can be used to work out the more straightforward claims.

Shielding: Reflecting the change to shielding advice, the Guidance confirms that furlough is available for those who are unable to work because: they are clinically extremely vulnerable, or at the highest risk of severe illness from coronavirus and following public health guidance, or they have caring responsibilities resulting from coronavirus, including employees that need to look after children.

Re-employing employees: As before, employees that were employed and who were made redundant or stopped working for their employer can be re-employed and claimed for (assuming they otherwise satisfy the conditions for furlough). However, the date has changed reflecting the extension. Now, the employee must have been employed as at 23 September 2020 and the employer must have made a PAYE Real Time Information submission to HMRC for affected employees from 20 March 2020 to 30 October 2020. There is no obligation on an employer to re-employ such employees.

Redundancy: During November, employers can claim for a furloughed employee who is serving a statutory or contractual notice period, although grants cannot be used to substitute redundancy payments. However, an important change now reflected in both the Guidance and the Treasury Direction is that that claims against CJRS cannot be made for any dates on or after 1 December 2020 during which a furloughed employee is serving either a contractual or statutory notice period. As such, it will no longer be possible for employers to pass notice period costs onto the taxpayer, for example were they to make staff redundant (though this restriction applies to notice pay costs in all circumstances, not just redundancy).

TUPE: A new employer is eligible to claim in respect of the employees of a previous business transferred if the TUPE or PAYE business succession rules apply to the change and the employees being claimed for were employed by their prior or new employer on 30 October 2020 and transferred employment on or after 1 September 2020.

Employer claim transparency: In relation to claims made under the scheme for the month of December onwards, HMRC will publish the names of employers and an indication of the value of the claim. Further detail on how HMRC will give an indication of the value of the claim will be available from late November 2020. An exception will be applied if the employer can show that publication would result in a serious risk of violence or intimidation to certain individuals (including officers or employees of the employer), or any individual living with them.

This note is a generic briefing and is not a substitute for detailed legal advice on the specific circumstances employers are facing. Institutions should therefore take legal advice.