Preparing for the end of the furlough scheme (CJRS)

The current scheme is due to end on 30 September 2021 and, to date, there seems little likelihood that it will be replaced with a new version or similar payroll subsidy scheme. This leaves employers still using the scheme with a number of issues to resolve. 


For employers that will not be able to afford or do not need all their staff currently on the CJRS, it is time to formalise plans to restructure their workforces. This is never a straightforward process and there are many legal formalities to be completed from an employment law perspective but it is important to remember that being on furlough is not supposed to affect an employee’s employment law rights in any way. 

Of the many considerations, the key ones include:

1. Ensuring sufficient notice is given to employees.  

Remember that an employee cannot be subject to a CJRS claim where they are serving a period of either contractual or statutory notice. So you need to work out the minimum notice period for each employee you will not take back when the furlough ends. In practice, to make an employee redundant, they may need to return to full pay before their individual notice period starts. It is also worth bearing in mind that where any payment is being made in connection with the termination, the notice period will impact the income tax and National Insurance Contribution (“NIC”) position under the Post Employment Notice Pay (PENP) tax rules and other linked legislation (see below). 

2. Making sure an employee receives the correct amount of redundancy pay and consideration of their statutory entitlement (plus any enhanced redundancy pay if the organisation adopts such a policy). 

When working out redundancy pay, this must be calculated at normal full pay rates for each individual, not the 80% pay entitlement they have whilst on furlough. Equally, time spent on furlough does qualify towards their period of service for redundancy calculation purposes (ie the weeks calculation). Where employees are on a flexible pay arrangement or they have no normal working hours, then pay is normally averaged over the previous 12 weeks of employment. If this period includes at least one week of furlough then the averaging must be based on full rather than reduced pay. 

3. Determining the income tax and NIC treatment

The tax legislation in this area has always been difficult, but our experience is that, following the changes since April 2018, such as PENP, it has becoming increasingly complex and there other potential pitfalls which could lead to an employer unknowingly creating additional tax liabilities. A considered control framework is a necessity to ensuring internal stakeholders are clear on roles and responsibilities and the business needs to consider potential options before it enters into discussions with potentially affected employees. 

Read more on termination payments. 

Final CJRS claims and corrections

CJRS claims must be made within 14 of the end of the calendar month you are claiming for – ie 14 October for September claims. If you have made a mistake in a claim this can be corrected within 28 days of claim period end (ie before 28 October, an adjustment must be made through the online portal to correct you claim regardless of whether the error results in an under or over-claim). At the time of writing there is no news of any extensions to these standard deadlines.

After 28 October, it will not be possible to correct under-claimed amounts but it should be remembered that if you have underpaid a member of staff, they are still entitled to be paid their full cash entitlement for the furlough period. 

If you have over-claimed you must notify HMRC directly and make arrangements to make direct repayment to HMRC: it is a legal requirement to notify HMRC within 90 days of either:

  • The date you ceased to be entitled to the payment
  • The time the payment is received.

Failure to notify errors within this timeframe could lead to significant penalties. 

After the CJRS

It will be important to remember that your last CJRS claim is far from the end of the matter. At the very least you must ensure that the CJRS payments you have received are declared accurately on your organisation’s tax return – the payments are taxable business income. If you have not corrected any CJRS errors by the time you come to submit your tax returns, it means that you may end up submitting an incorrect return – which could later cost you dearly – particularly if HMRC takes the view that your errors were “deliberate behaviour”: HMRC can name and shame businesses for such issues.

We recommend that all businesses that have made frequent CJRS claims have an independent review of their processes and claims to help identify claim errors and get them put right. 

Contact Geraldine Browne if you have any queries.

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