The government has published its sixth Treasury Direction governing the operation of the coronavirus job retention scheme (CJRS). This follows the extension of the CJRS to 30 April 2021 and sheds light on some of the practical issues that arise.

On the whole, the CJRS will continue to operate as it has done since November 2020. We have known for some weeks that the government will not require employers to contribute to the furlough pay employees receive for hours they are not working. Employers need only pay the employer national insurance contributions and pension contributions for furlough hours.

The government has had to alter the reference salary rules for those on variable pay to take into account the fact that, by its end date of 30 April, the CJRS will have run for more than a year. Without a change to the rules, this means that, from March 2021, the relevant reference period employers use to calculate the CJRS grant will overlap with the period during which the CJRS has been running. That could result in employers basing furlough pay for March and/or April 2021 on periods during which the employee received furlough pay in March or April 2020. This would theoretically make it possible that an employee would only receive 80% of 80% of pay.

The calculation for employees with variable pay is based on the higher of:

1. the employee's average income in the 2019-20 tax year; and 
2. what they earned in the equivalent month of the previous year. 

The government wants to avoid a situation where employees receive less pay this year because they were furloughed when the scheme started on 23 March 2020 (and therefore began receiving reduced pay). The rules solve this issue by requiring employers to use the March and April 2019 figures to provide a more appropriate comparison. If employees received a pay rise between March 2019 and March 2020, the "higher of" rule means the employer must use the 2019-20 average. The same change applies to the "usual hours" calculation to avoid a similar issue arising there.

The sixth Treasury Direction also sets out the deadlines for claiming CJRS grants for February, March and April 2021.