HCR Law Events

9 November 2020

Further Furlough Extension – Scheme Extended until the end of March 2021

On 31 October 2020, the Chancellor announced that the Coronavirus Job Retention Scheme (the “CJRS” or the “Scheme”) was being extended to December 2020 in response to the second national lockdown in England. Just 5 days later (on 5 November 2020), the government revealed a further extension to the end of March 2021. This reflects evidence that the economic effects of a lockdown on businesses are much longer lasting than the duration of any restrictions.

Under the extended CJRS (which started on 1 November 2020), until the end of January 2021, 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 and can “top up” employee wages above the Scheme grant at their own expense, if they wish to do so.

Employers will have the flexibility to “fully furlough” employees (this means that the employee will not perform any work for the employer whilst furloughed) or make use of a “flexible furlough” arrangement (this means that an employee can work for any amount of time or shift pattern which can vary from week to week by agreement).

The Scheme will be reviewed in January 2021 to decide whether economic circumstances have improved enough to ask employers to increase contributions. As a result, the government’s contribution to employee wage costs may change in February and March 2021. Details of the scheme which will apply at that time will follow the government’s review.

The Job Retention Bonus (due to be paid out for employees retained after furlough until the end of January 2021) and the Job Support Scheme (which was originally due to replace the CJRS and come into operation on 1 November 2020), have both been put on hold.

Initial details of the extended CJRS are contained in a HMRC policy paper which sets out updated information on the eligibility criteria for employers and employees; what employers will need in order to claim under the Scheme; and updated information on reference data to calculate those claims. We understand that full guidance for the CJRS extension will be published tomorrow (10 November 2020).

Our previous note on the extended CJRS summaries the basic Scheme details. We will prepare a further comprehensive note for schools once the full guidance has been released. In the meantime, the key additional points to be aware of from the policy paper are as follows:

  • Employees can (but don’t have to) be furloughed if they are staying at home in line with public health guidance (i.e. the clinically extremely vulnerable) or if they need to stay at home with someone who is clinically extremely vulnerable. Similarly, employees can be furloughed if they have caring responsibilities resulting from coronavirus, including employees that need to look after children.
  • Employees that were employed and on an employer’s payroll on 23 September 2020, who were made redundant or stopped working for their employer after that date, can be re-employed and claimed for under the extended CJRS. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees. Similarly, an employee who was on a fixed term contract, on payroll on 23 September 2020, and the contract expired after 23 September 2020 can be re-employed and claimed for, provided that the other eligibility criteria are met.
  • When “furloughed”, as with the previous CJRS, employees cannot perform any work for their employer that generates income or provides a service but they can take part in training; volunteer for another employer or organisation; or work for another employer (if contractually permitted to do so).
  • As far as we are aware, under the extended CJRS, there are no restrictions on making redundancies (although, as with the original Scheme, no part of the furlough grant can go towards paying redundancy pay).
  • Employers should discuss proposed furlough arrangements with their staff and must confirm, in writing, with each employee that they have been furloughed or flexibly furloughed. The policy paper suggests that the employee does not have to provide a written response. That said, as a matter of good practice and to mitigate the risk of potential employment law or breach of contract claims, we recommend that the written agreement of each employee to the proposed change in their contractual terms is sought.
  • It is possible to backdate a claim under the extended CJRS to 1 November 2020 even if a written agreement was not in place with the employee at the time. This is subject to a retrospective agreement being in place by the end of 13 November 2020. The backdated agreement will be dependent on the employee genuinely having been furloughed during this time. If the employee has actually been working all of their usual hours, furlough cannot be backdated.

 

We will update schools further following the release of the full extended CJRS guidance. For specific queries in the meantime, please get in touch.

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Hannah Wilding, Associate

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