The Government has announced that the cut-off date for the Coronavirus Job Retention Scheme (CJRS) has been extended from 28 February 2020 to 19 March 2020, potentially enabling employers to furlough employees taken on during that period.

The CJRS allows employers to retain employees on the PAYE Payroll who are not carrying out work for them by placing them on furlough and to claim a grant of 80 per cent of a furloughed employee’s usual pay, plus employer National Insurance Contributions (NICS) and minimum employer auto-enrolment pension contributions.

The updated guidance published on Wednesday 15 April 2020 states that to be eligible for the scheme, an employee must have been on the employer’s PAYE payroll on or before 19 March 2020 and HM Revenue & Customs (HMRC) must have been notified of a payment through Real Time Information (RTI) by that date.

The Treasury says that it expects the extension of the cut-off date to benefit more than 200,000 employees, who employers would otherwise have been unable to furlough.

The new guidance also changes the arrangements for employees made redundant or who left their employment voluntarily in recent months. The guidance now states that anyone on an employer’s payroll on 28 February 2020 and notified to HMRC on an RTI submission on or before that date who stopped working for their employer prior to 19 March 2020 can be re-employed and furloughed.

At the same time, the Treasury has issued a Direction, giving instructions to HMRC for making payments under the CJRS.

Crucially, the direction confirms that the scheme applies to anyone who is furloughed “by reason of circumstances as a result of coronavirus disease.”

The Direction also provides an exemption for company directors who are also furloughed employees to carry out duties “relating to the filing of company accounts or provision of other information relating to the administration of the director’s company…”

At the same time, it confirms that there must be a written agreement between the employer and the furloughed employee “that the employee will cease all work in relation to their employment”.

HMRC has confirmed that it expects the scheme to come into effect next week.

The move followed an update to the guidance which included clarification on the following points (dates updated to reflect the more recent announcement):

• Workers on all categories of visa can be furloughed, including those that do not allow access to public funds.
• Employees who are currently off sick can be furloughed for business reasons and moved from Statutory Sick Pay (SSP) to furlough pay.
• Employers have discretion as to whether to furlough those on long-term sick leave or continue to pay them SSP.
• If an employee becomes sick while furloughed, it is up to the employer whether to leave them on furlough or to move them to SSP. Furlough cannot be claimed at the same time as SSP.
• Employees who are shielding in line with public health requirements or who are staying at home with someone who is shielding can be furloughed. Previous versions of the guidance stated: “if they are unable to work from home and you would otherwise have to make them redundant.” This requirement has now been removed.
• New employers since 19 March 2020 can claim under the CJRS if either the TUPE or PAYE Business Succession Rules apply to the change of ownership of the business.
• Groups of companies that have consolidated their payrolls into a new PAYE scheme after 19 March 2020 can still furlough employees and claim under CJRS.
• Any employees furloughed on their return from statutory leave should be paid 80 per cent of their usual wages, rather than their statutory pay rate.

Information required to make a claim

Additionally, the Government has set additional information that employers will need to provide in order to be able to make a claim. The new full list of required information is:

• your employer PAYE reference number
• the number of employees being furloughed
• National Insurance Numbers for the employees you want to furlough
• Names of the employees you want to furlough
• Payroll/works number for the employees you want to furlough
• your Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
• the claim period (start and end date)
• amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
• your bank account number and sort code
• your contact name
• your phone number

IR35 in the public sector

Within the updated guidance, the Government has provided detailed information about how the CJRS will work for contractors working within the scope of the IR35 off-payroll working rules in the public sector.

The guidance states that it may be appropriate to furlough IR35 contractors deemed employees “in a small number of cases”.

The public sector organisation would then have to confirm this with both the contractor’s Personal Service Company (PSC) and the fee-payer and agree between the parties that the contractor will not carry out work for the organisation during the period of furlough.

The fee-payer – usually the agency that pays the PSC – will have apply for a furlough payment of 80 per cent of the monthly contract up to the £2,500 cap and the employer National Insurance Contributions (NICS).

The fee-payer will then need to pay the furlough payment in respect of wages to the PSC via PAYE and make the necessary tax and NIC deductions.

The PSC will have to report the payment to the contractor as deemed employment income via PAYE using box 58A on the PAYE Real Time Information return.

If a contractor opts to furlough themselves as an employee or director of their PSC, and they are still receiving an income from a public sector organisation, including through the CJRS, they must deduct this income from their reference pay for the CJRS.