There will still be employers who need to take advantage of the Coronavirus Job Retention Scheme (CJRS) over what we hope will be the final few months of the scheme to the end of September 2021, as the hospitality and creative industries must still operate at less than full capacity. It does mean, though, that as employers reduce the number of employees furloughed and the scheme support tapers off, there will be new technical challenges to contend with as guidance is still changing.

Calendar lookback

For claims from 1 March 2021 to 30 September 2021 for variable pay employees, the comparison used to determine usual hours and pay is to the higher of the average in 2019/20 or the corresponding pay period in 2019 (not 2020, as some employees were already furloughed by then and, even if they weren’t, the lookback to 2019 is mandatory not optional).

For claims from 1 May 2021 to 30 September 2021 when calculating the average usual hours and average pay, both hours and pay are now ignored if the employee had a period of statutory leave in 2019/20. This means a period where the employee was on:

• statutory sick pay (SSP)-related leave;
• family-related statutory leave (ie, maternity, adoption, shared parental, paternity, and parental bereavement);
• reduced rate paid leave following a period of SSP-related leave; and
• reduced rate paid leave following a period of family-related statutory leave.

A period of reduced rate leave could mean where no pay, or less than normal pay, is being received, for example, from weeks 40-52 of maternity leave after the 39-week maternity pay period.

For claim periods that ended on or before 30 April 2021, the variable pay calculation excluded hours, but included pay that would have skewed the average.

Reference pay

There are now three cohorts for whom furlough claims can be made:

• Cohort one – reported on a full payment submission on or before 19 March 2020, or affected by the Transfer of Undertakings (Protection of Employment) Regulations (TUPEd) on or after 28 February 2020, so eligible for inclusion in the CJRS from March 2020 to September 2021.
• Cohort two – reported on a full payment submission after 19 March 2020 and on or before 30 October 2020, or TUPEd on or after 31 August 2020, so eligible for inclusion in the CJRS from November 2020 to September 2021.
• Cohort three – reported on a full payment submission after 30 October 2020 and on or before 2 March 2021, so eligible for inclusion in the CJRS from May 2021 to September 2021.

Reference pay used to calculate the 80% of wages due to a fixed rate employee is anchored to the pay in the pay period before the reference date. It is not inflated to take account of any increase because of pay rises or national minimum wage uprating. However, any payment for hours actually worked must be based on current contractual pay, which may have increased since the reference pay period.

Ending furlough

Bringing furlough to an end is a change of status just as it was to place employees on furlough, so this should be documented and evidence retained for five years.

As more employees will be returning to work permanently mid-week or mid-month, it is important to remember that usual hours are only calculated to the last day of furlough, not across the whole pay period. This was a change of approach for claims made on or after 14 September 2020.

As more furlough periods will not be complete weeks or months, the wage cap that informs the maximum wages recoverable may not be £2,500 per month or £576.92 per week. If less than a full week or month is being claimed, the maximum value will be based on the following day rates:

• June and September – £83.34
• July and August – £80.65

About the author

Kate Upcraft, employment tax specialist and Director, Kate Upcraft Consultancy Ltd