HCR Law Events

3 November 2020

Furlough Scheme Extended until December

In response to the second national lockdown in England, which is due to begin on 5 November 2020, the Coronavirus Job Retention Scheme (the “CJRS”) is being extended until December 2020, delaying the introduction of the Job Support Scheme (the “JSS”).

The HM Treasury press release provides an overview of the eligibility rules governing the extended CJRS and we understand that additional (more detailed) guidance is due to be issued shortly.
This note summarises the key details of the extended CJRS. It is correct at the time of writing on 2 November 2020.

Key details

  • The extended CJRS started 1 November 2020 and will continue “until December” 2020. The precise end date is unclear (possibly to allow for a delay in the proposed end date of the national lockdown in England).
  • Under the extended CJRS, the cost to employers of retaining workers will be reduced when compared with the scheme which ended on 31 October 2020. The level of the government grant towards employee wage costs will mirror that provided under the CJRS in August:
    • The government will pay up to 80% of an employee’s normal pay for hours not worked (subject to a cap of £2,500 per month). Employers will be responsible for employers National Insurance and pension contributions.
  • As with the original CJRS, employers can “top up” employee wages above the scheme grant at their own expense, if they wish to do so.
  • With regard to employer eligibility:
    • All employers (small or large; charitable or non-profit) with a UK bank account and UK PAYE schemes can claim the grant.
    • As with the previous scheme, publicly funded organisations (such as maintained schools and academies) will not be eligible. They should continue to use public funding to pay employee wage costs. However, partially publicly funded organisations or those with a private income stream may be eligible where their private revenues have been disrupted (for example, in a school setting, private income streams related to catering or sports facilities lettings). All other eligibility requirements apply to these employers.
    • The employer does not need to have previously used the CJRS.
  • The employee eligibility criteria has been expanded to ensure that most new starters and existing employees are eligible.
    • To be eligible, employees must have been on an employer’s PAYE payroll before midnight on 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.
    • Employees do not need to have previously been furloughed under the CJRS.
  •  Flexible furlough will continue to be an option for those employers (such as schools) where there is a reduced demand as a result of the pandemic rather than a complete closure of the workplace. As a result, where appropriate, employees can work part-time and receive a furlough grant for unworked hours. In these circumstances, employers will continue to pay employees for hours worked in the normal way. Where there is no work available, eligible employees can be furloughed on a full-time basis.
  • When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
  • Following a short transition period where employers will be paid the government grant towards employee wage costs in arrears, employers will receive the grant upfront. We understand that there will be no gap in eligibility for support between the previously announced end date of the CJRS (i.e. 31 October 2020) and the extension.
  • Crucially, just as with the previous CJRS, furlough arrangements will require the written agreement of each employee to the proposed change in their contractual terms. Without obtaining the agreement of staff, employers may be at risk of claims of breach of contract, unlawful deductions from wages and/or constructive dismissal as they will be failing to pay their employees in line with their contract of employment.
  • The JSS will be introduced following the end of the extended CJRS (whenever that may be).

Initial considerations for schools

Can schools in England access government funding under the extended CJRS even though they will remain open during the lockdown period?

Yes, provided they meet the employer eligibility requirements referred to above. The extended CJRS is not intended to cover only those businesses that are forced to close as a result of the national lockdown in England (such as those in the hospitality sector).
Full-time furlough can be used in circumstances where there remains no work available for certain employees (such as bus drivers and lunchtime supervisors), assuming they still remain employed; whilst flexible (part-time) furlough will be appropriate for those roles where there is a reduced demand as a result of the pandemic.
What if schools have already agreed short-time working arrangements with employees under the JSS?
In anticipation of its launch on 1 November 2020, it is possible that some schools may have already agreed short-time working arrangements with certain employees under the JSS Open Scheme. We recommend that those schools contact affected employees as soon as possible to explain that the government has extended the furlough scheme and delayed the introduction of the JSS. Ask them to agree to a period of furlough leave instead (most likely a period of flexible furlough given that there is likely to be some work available).

What should schools do now?

We recommend that schools familiarise themselves with the details of the extended CJRS (particularly the employee eligibility requirements) and consider which employees may be able to benefit from the scheme.

Further guidance is expected imminently and we will update schools once it has been issued. For specific queries in the meantime, please get in touch.

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Hannah Wilding, Associate

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