In recent weeks, there have been a number of last-minute changes to the support available for employers, including the extension to the Coronavirus Job Retention Scheme (CJRS).

The CJRS, originally planned to end on 31st October, was first extended throughout November, in order to provide further support to businesses throughout the month-long national lockdown in England. It was then extended further until 31 March 2021.

Under the CJRS extension, both large and small employers will be eligible to claim, and will have the flexibility to have employees fully furloughed or flexibly furloughed on a part time basis.

Further details on eligibility, and the support provided through the extension are available here.

More detailed information on making claims under the CJRS extension can be found here.

Whilst the extended scheme remains broadly similar to the original, there are a few key differences which we detail here, particularly in terms of calculating pay reference periods, and the potential pitfalls employers may face if they decide to re-employ employees who have been recently made redundant.

Key changes to the CJRS extension

EMPLOYER’S CONTRIBUTIONS: These have been significantly reduced from the level that applied in October, and now mirror the levels available under the CJRS in August. For furloughed employees the government will pay 80% of wages up to a cap of £2,500 and for the hours the employee does not work, employers will only pay employer National Insurance and pension contributions. This will be reviewed at the end of January 2021.

EMPLOYEE ELIGIBILITY: Employees who were on an employer’s PAYE payroll by 30th October 2020 are eligible for the extension. For employees that meet the eligibility criteria, and were previously furloughed, employers must use the same calculations for calculating reference pay and usual hours as the original CJRS.

Employees do not need to have been furloughed under the CJRS previously. For an employee who meets the criteria of the extended scheme but was not previously eligible for CJRS, the alternative calculations of reference pay and usual hours must be used.

See below for further details on calculating pay reference periods.

NO CAP ON EMPLOYEE NUMBERS: The cap that applied for claims under the flexible furlough rules introduced in July has been removed for claims made from 1st November onwards.

NEW RULES ON NOTICE: In a significant change to the previous CJRS rules, claims may not be made for any day that an employee is serving notice (for any reason) between 1 December 2020 and 31 January 2021.

Calculating pay reference periods

How reference pay and usual hours should be calculated will vary depending on whether employees were eligible for the original CJRS scheme.


Employees employed (and included on a Real Time Information submitted to HMRC) on or before 19th March 2020

  • For fixed term employees – Use the pay period on or before 19 March 2020.
  • For variable pay employees – Use the higher of the corresponding calendar period in the previous tax year or the average monthly wages for the tax year 2019 to 2020.


Employees employed (and included on a Real Time Information submitted to HMRC) after 19th March 2020

  • For fixed term employees – Use the last pay period on or before 30 October 2020.
  • For variable pay employees – Use the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins.
View our reference pay calculation chart

Re-employing employees

Employees that were employed and on the payroll on 23 September 2020) who were made redundant or stopped working afterwards can be re-employed and claimed for. The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.

This new announcement however raises a number of employment law issues for the employer to navigate:

  • If the employee has left, will it be new employment entirely or a continuous service? Should the employee be required to repay any redundancy payment? What happens to their continuous employment rights?
  • If they are working their notice, will they continue on notice or will the notice of dismissal be rescinded? If they remain on extended notice, will they be entitled to full pay or 80%.? (The latter would usually be a breach of employment law.)
  • If the employee is re-employed under a new contract, what will be the terms?

This new provision may well offer employers an opportunity which benefits both them and the employee, in particular where an employer considers that it is likely to need the role in the future, but was forced to issue redundancies ahead of the original closure date of the CJRS scheme at the end of October.  Employers should be aware of the costs that they will be incurring, as after January 2021, the government is reviewing the contributions required by the employer to the furlough scheme.

However, if the role was made redundant on the basis that there was no prospect of the job role continuing in the future, there appears to be no argument to re-employ the dismissed employee.

There is no obligation on businesses to re-employ, and employers should, on this basis, give very careful thought to responding to requests to re-employ from former employees or take advice on how best to re-engage, if they wish to do so.

If you have any queries relating to the CJRS extension, or the key changes made to the scheme, our expert team is on hand to give guidance and advice – please do not hesitate to get in touch.