Last chance for employers to claim September furlough payments

Thursday 14 October is the final day employers can claim furlough payments for their employees' unworked hours in September.

This is the final payment available as part of the government's Coronavirus Job Retention Scheme (CJRS), which will no longer be available for claims after 30 September.

Employees receive up to 80% of their wages up to £2,500 a month - the government makes a contribution of up to 60%, while employers cover the remaining 20% along with pension and National Insurance contributions.

According to the latest figures from 31 August 2021, 440,000 employers were using the scheme with 1.3m staff on furlough.

Here, Which? Money and Which? Legal explain what the furlough rules are and how your pay might be affected. You can jump to the sections that are relevant to you using the links below.

Read the latest coronavirus news and advice from Which?.

When must job retention scheme payments be claimed?

Claimsfor furlough payments in September must be made by 14 October 2021.

You can no longer submit claims for claim periods ending on or before 31 October 2020.

Employers can apply online and will need their Government Gateway user ID and password.

The government has provided details online of what you'll need before you start a claim, along with a link to begin the process.

What happens now the furlough scheme has ended?

The furlough scheme ended on 30 September 2021. Employers have until 14 October to make claims for furloughed employees' unworked hours.

Now the government support has ended, employers must decide whether they want to pay for employees to remain furloughed, have them back at work or make them redundant.

The Bank of England has said that it's expecting a small rise in redundancies as a result of the scheme ending - but in most cases employers should have already let affected employees know if their work will be terminated at the end of the month.

If you're at risk of redundancy, you may be eligible for certain benefits such as jobseeker's allowance (JSA) once you're out of work.

If your earnings drop, you may also be entitled to claim Universal Credit.

• Find out more:how to calculate your redundancy pay

What did the job retention scheme offer?

The CJRS paid grants to any employer that furloughed its staff instead of letting them go - regardless of the employer's size.

The scheme changed a few times since it was first launched.

• Between March and July 2020 The government paid for 80% of furloughed workers' wages (up to £2,500 a month), and it also covered employer's National Insurance (NI) and pension contributions. Until the end of July, there were no changes to the scheme - except that employers can choose to use 'flexible furlough' measures, outlined below.
• In August 2020 Employers had to start chipping in by paying employer's NI and pension contributions, with the government continuing to pay 80% of the employees' salaries.
• In September 2020 Bosses had to pay 10% of furloughed staff's wages, while the government put in 70%.
• In October 2020 Employers paid 20% towards wages, with the government covering 60% of the total.

The scheme was due to close on 31 October 2020, was then extended to the end of April 2021, and extended further to September 2021.

For the majority of the time, the government covered 80% of furloughed workers' wages, while employers had to pay NI and pension contributions.

From 1 July 2021, the government's contribution reduced to 70% of furloughed workers' wages, and from 1 August until 30 September this dropped to 60%. Employers were expected to contribute more, so employees should have continued to receive the same amount of money each month.

Listen: our experts discuss travel insurance with Covid cover on the Which? Money Podcast

Who was eligible for furloughing?

The furlough rules were slightly different depending on when the claim was for.

Furlough claims on or before 30 April 2021

To be eligible for a CJRS claim on or before 30 April 2021, you must have been on your employer's PAYE payroll on 30 October 2020.

The employer must also have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings.

Employees didn't need to have been furloughed under the CJRS previously.

Furlough claims from 1 May 2021 onwards

For claims made from 1 May 2021 onwards, you must have been on your employer's PAYE payroll on 2 March 2021.

The employer must also have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings.

Employers did not need to have previously claimed for employees before 2 March 2021 to claim for periods on or after 1 May.

You could have been on any type of contract, including a zero-hours, fixed-term or temporary contract.

It was important that you and your employer had agreed to you being furloughed and that the agreement was recorded in writing. This could be done by email or through a letter.

The scheme didn't apply if you are self-employed. You might, however, have qualified for support under the self-employed income support scheme (SEISS).

Who or what was not included?

The government measures didn't help all workers in all circumstances.

The main groups of people likely to have missed out on the extended CJRS include:

• Those who were not in work on 30 October 2020 for claims on or before 30 April 2021, or were not in work on 2 March 2021 for claims on or after 1 May 2021
• Those who earned a low basic salary that was usually topped up with non-compulsory commission
• Those with payday loan payment obligations that had been based on their full salary and who are not being given any payment reprieve
• Limited company directors who earn a significant amount of their salary through dividends.

What does it mean for directors of limited companies?

While those who run limited companies may consider themselves to be self-employed, the purposes of this scheme considered directors to be employees of their company.

As such, they could be furloughed provided they meet the other eligibility criteria. However, the 80% salary payment would only cover their regular pay.

As most directors in this position will usually keep their salaried pay as low as possible and top up their income with dividends, this is likely to mean they would receive very little from the government scheme; dividend income is not included.

What's more, while on furlough, directors were only allowed to carry out statutory directional duties, such as filing documents on Companies House. Any other form of work - even the maintenance of social media accounts, such as tweeting responses to customers or updating company profiles - was not allowed.

What if I have more than one job?

Jobs with different employers were treated separately. This means you could have been furloughed from one or both jobs.

Those caring for someone else who was either self-isolating or suffering with coronavirus - including their own children - can also be furloughed.

Did you have to be at risk of redundancy to be furloughed?

The scheme wasn't limited to those employees who would otherwise be made redundant.

It applied to anyone who was furloughed by reason of circumstances as a result of coronavirus.

The Chancellor confirmed that an employer couldn't apply for a grant if doing so would be 'abusive or is otherwise contrary to the exceptional purpose' of the scheme.

Could employers take back staff who had recently left or been made redundant?

HMRC confirmed that some employees could be rehired, and then put on furlough.

For CJRS claims on or before 30 April 2021, employers could choose to rehire any staff made redundant since 23 September 2020 and put them on furlough, as long as the employer made a PAYE Real Time Information submission to HMRC in relation to that employee between 20 March 2020 and 23 September 2020.

However, for claim periods starting on or after 1 December 2020, you couldn't claim for any days where a furloughed employee was serving a contractual or statutory notice period for the employer.

However, there was no obligation on the business to re-employ you.

How were furlough wages paid?

If your employer put you on furlough, it would still pay you through PAYE as normal.

This means that your furlough pay was subject to income tax and National Insurance contributions and would be taken automatically.

So for those who only received 80% of their salary, the total you get in the bank will be reduced further by these tax payments.

The government covered employers' National Insurance contributions and pension contributions equal to the amount due under auto-enrolment rules on the reduced pay up to August 2020, after that it was the employer's responsibility.

What was your furlough pay based on?

Your employer should have included:

• Regular wages
• Overtime that's already been worked
• Non-discretionary fees
• Compulsory commission payments
• Piece-rate payments.

Your employer wasn't allowed to include:

• Payments made at the discretion of the employer or a client including payments such as tips
• Discretionary bonuses
• Discretionary commission payments
• Non-cash payments
• Non-monetary benefits, such as benefits in kind (a company car, for example) and salary sacrifice schemes (including pension contributions) that reduces an employees' taxable pay.

The 80% salary calculation was worked out differently depending on the way were paid. You can find out more on the government guidance page for employers.

For workers paid a fixed full or part-time salary, furlough pay was based on what was earned during their last paid period.

So to work out 80% of your wage, your employer started with what you got paid in the last pay period, divided by the total number of days in that pay period, multiplied by the number of days in the furlough pay period and multiplied by 80%. If applicable, the cap of £2,500 may have kicked in.

This worked a little differently for those who started their job recently, as well as for those on zero-hours contracts, or other workers whose pay varies month to month.

Different methods of calculation on the reference pay were adopted for the extended CJRS for those not previously eligible.

Those on a fixed salary got 80% of wages payable in the last pay period ending on or before 30 October 2020.

For those whose pay varies 80% was based on the average pay between the start of your employment or 6 April 2020 (whichever is later) and the day before your CJRS extension furlough period begins.

What if 80% of your pay was less than National Living Wage or minimum wage?

There was no obligation for employers to top up the salaries of those who will end up earning less than the National Living Wage or minimum wage once they receive 80% of their pay.

Instead, those with low earnings might be eligible for Universal Credit payments.

In some circumstances, an employer could require staff to undergo training, for which they had to pay at least the minimum wage. However, apprentices that continued their training also had to be paid at least the minimum wage that applied to them.

Did employers have to sign up to the job retention scheme?

You could ask to be furloughed, but ultimately it was your employer's decision as to which employees it furloughed.

Employers were under no obligation to sign up to the scheme or continue keeping people on furlough; they were within their rights to make people redundant or dismiss them for other potentially fair reasons.

However, the scheme was made with the aim of encouraging employers to keep as many staff as possible.

Employers didn't necessarily have to prove that their business has encountered adverse effects due to the coronavirus outbreak. However, the purpose of the scheme was to reimburse employers for costs arising from the 'health, social and economic emergency resulting from Covid-19, and no claim could be made if it was contrary to this exceptional purpose.

As the scheme was voluntary, there is therefore no option to appeal an employer's decision not to take the grant.

Furlough fraud warning

HMRC has admitted a large amount of money paid to employers to cover furloughed staff wages could have been a result of fraud or genuine errors.

According to the latest figures from 14 September 2021, the government has so far paid £69.3bn through the CJRS, but back in September 2020 the Public Accounts Committee heard that between £1.75bn and £3.5bn could have been paid out wrongly.

We wrote about the government's 'furlough fraud amnesty' encouraging employers to own up to being paid too much to avoid being hit with costly charges if they're found to have flouted the rules.

HMRC has also been encouraging individuals to report their employers where they suspect a fraudulent claim has been made, eg they're being asked to carry out work while on a period of furlough.

In the 2021 March Budget, Mr Sunak announced that HMRC would be forming a special task force of 1,000 investigators aiming to crack down on fraudulent furlough and self-employed income support scheme claims.

What was 'flexible furlough'?

From 1 July 2020, the CJRS included an added level of flexibility to allow employers to bring employees back to work on a part-time basis, if it's safe to do so.

So, if an employee were to go back to work for two days a week, for example, their employer would pay them for the hours they've worked and the furlough scheme would continue to pay them for the remaining three days a week when they're on furlough.

Flexible furlough agreements could last any amount of time, however, the period claimed for must have been for a minimum claim period of seven consecutive calendar days according to government guidance.

How did the job retention scheme work with statutory sick pay?

Employees could claim SSP from the first day they were off sick. This is whether they were ill with coronavirus or just self-isolating.

As statutory sick pay is paid by employers, the government introduced support for small and medium businesses with fewer than 250 employees to help their payments.

Eligible companies could be reimbursed for two weeks' statutory sick pay per employee that claims, and would only need to maintain records of who was off sick and when. Notes from a GP were not necessary.

Companies could also reclaim added expenditure resulting from employees claiming statutory sick pay because of Covid-19.

What if I was sick or told to self-isolate?

The eligible employees government guidance is not entirely clear.

While it confirmed that if you became sick while on furlough your employer could decide whether to put you onto SSP or keep you on furlough, it also says furlough is not intended to cover short-term absences due to sickness.

However, it goes on to say an employee can be furloughed for 'business reasons'.

The issue for employers making a claim is that they could only do so if it was in respect of employees within the scope of the CJRS, ie as a result of the health, social and economic emergency caused by the pandemic.

Here is Which? Legal's interpretation of the guidance:

If you were on furlough and became sick

If you became sick while on furlough, it was up to your employer to decide whether to put you onto SSP or keep you on furlough.

If you were under a flexible furlough arrangement

There is no specific guidance on how to handle a situation where a sick employee is working part of their working week and furloughed for the remainder.

If you were under a flexible furlough arrangement and you fell sick, or were told to self-isolate when you were due to be working, you should be paid SSP or company sick pay as normal.

The position is more complicated if you were sick and due to go back on furlough - you cannot be on sick leave and furloughed at the same time.

It is not entirely clear from the government guidance whether allowing you to be placed on scheduled period of furlough (even though you are still sick) would be considered an abuse of the scheme. The guidance says that short-term illness or self-isolation should not be a consideration when deciding whether to furlough an employee.

On the other hand, the guidance also says that if your employer wanted to furlough you for business reasons and you are currently off sick, they may have been able to do so.

It's been reported that HMRC's furlough helpline has said their interpretation of the guidance in these circumstances is that the employee should stay on sick leave for the whole period.

If you have been told to self-isolate

When the furlough scheme was open, the guidance did not explicitly exclude the possibility of you being furloughed. It did say that self-isolation should not be a consideration when deciding whether or not to furlough someone.

As mentioned above, an employee could be furloughed for 'business reasons'. The guidance also says employers 'can furlough employees who are clinically extremely vulnerable or at the highest risk of severe illness from coronavirus'.

Ultimately it was up to your employer to decide whether or not to furlough you if you are told to self-isolate.

What is the Coronavirus Statutory Sick Pay Rebate Scheme?

The Chancellor first announced the Coronavirus Statutory Sick Pay Rebate Scheme at the 2020 Budget in March and it opened for applications on 26 May 2020.

The scheme allows employers in small and medium-sized businesses with fewer than 250 employees to apply for a rebate, reimbursing them for statutory sick pay (SSP) paid to employees for any reason related to coronavirus.

To be eligible, employees must be paid through PAYE.

Online applications can be made via HMRC. It will review the application and, if successful, pay the rebate within six working days.

What are my parental leave and pay rights?

On 24 April 2020, the government announced that furloughed workers planning to take paid parental or adoption leave will be entitled to their statutory pay based on their usual earnings rather than a furloughed pay rate.

This method of calculation of earnings will apply to Maternity Pay, Paternity Pay, Shared Parental Pay, Parental Bereavement Pay and Adoption Pay, where the person is on furlough with reduced pay during part or all of the relevant period of leave.

If you're on statutory maternity leave, you still have the right to return to work. People who are already on maternity or paternity leave or other statutory family-related leave can't be put on furlough until their agreed period of leave is over.

What happens if I'm unable to take my annual leave because of Covid-19?

The government has confirmed that anyone who hasn't been able to take their statutory annual leave (ie the minimum 5.6 weeks) due to Covid-19, will now be able to carry that unused leave over into the next two leave years.

Your employer can, by giving appropriate notice, require you to take your leave at or by certain times.

Could you work or volunteer while on furlough?

While on furlough, employees couldn't do any work for their employer - even sending emails for work purposes.

However, you could still do training if asked to do so.

Unless it's prohibited by their employment contract, employees were free to work elsewhere while on furlough. However, they weren't be able to work for any business that is associated with or linked to their employer.

You could also do volunteer work, provided this was not for your employer.

Alternatives to furlough leave: lay-off or short-time working

In some situations - for example, to help avoid redundancies - your employer might have asked you to stop working for a while (a 'temporary lay-off') or work fewer hours ('short-time working').

However, according to Which? Legal, your employer needed a contractual right to do either of these things.

If you were laid off or put on short-time working, you may have been entitled to a statutory minimum 'guarantee payment' of up to £30 a day for a maximum of five work-less days in any three-month period.

To be eligible for such a payment, you must have been employed continuously with your employer for at least one month and not have refused any reasonable alternative work.

You might be able to apply for redundancy and claim redundancy pay if you have been laid off or put on short-time working for four or more consecutive weeks, or six weeks within a 13-week period.

There are other eligibility requirements that need to be met before you can claim, so take advice to see whether you qualify.

What help is available for the self-employed?

On 27 March 2020, the Chancellor announced an additional raft of measures to help self-employed workers, known as the self-employed income support scheme. See our dedicated story that explains what this offered.

What benefits are available to help workers?

To support those on low incomes and those who have already been made redundant, several means-tested benefits payments will be increased.

The Universal Credit standard allowance and working tax credit basic element were both increased by £1,000, but this uplift ended at the start of October 2021.

Claimants who can't attend meetings with work coaches because they're in self-isolation won't face sanctions - as long as this is agreed by their work coach ahead of the meeting.

• Find out more:Universal Credit explained

Other financial help available

If your income has been adversely affected by the pandemic, there are a number of other measures in place to help.

These include:

• Tailored support from your lender The deadline to apply for a payment holiday on your mortgage, credit card or personal loan has now passed, but the FCA has told lenders to continue to offer tailored financial support to customers who are struggling to make repayments due to the Covid-19 pandemic.
• Tax help for self-employed and businessesHMRC has set up a dedicated coronavirus helpline for self-employed workers and business owners who are concerned about making tax payments. Call 0800 015 9559; 8am to 8pm Monday to Friday; 8am to 4pm Saturday.
• Deferred VAT payments Businesses that deferred their VAT payments due to coronavirus were going to face a lump-sum bill in March 2021. However, the Chancellor announced that this deferred bill can now be spread over 11 smaller repayments - and no interest will be added.

Additional help for businesses

In the Budget on 3 March 2021, Mr Sunak announced a new £5bn Restart Grant available for certain businesses once they are allowed to reopen. Non-essential retail businesses can get up to £6,000, along with up to £18,000 for businesses in the hospitality and leisure sectors, including personal care.

This is in addition to the £4.6bn in new grants announced on 5 January 2021, when the Chancellor announced support for businesses during the latest national lockdown.

This included one-off grants of up to £9,000 for retail, hospitality and leisure businesses, plus a £594m discretionary fund for other affected businesses.

The Coronavirus Business Interruption Loanclosed on 31 March 2021. This separate scheme was launched to support small and medium businesses with loans, overdrafts, and invoice and asset finance up to £5m for up to six years.

You can find out more about government business support on gov.uk.

This article was originally published on 20 March 2020 when the Chancellor announced the coronavirus job retention scheme. It was last updated on 14 October; the final date to make a claim for September. Additional reporting by Kim Kaveh.