COVID-19 EXPERT LEGAL INSIGHTS

Welcome, Furlough Part II – what took you so long?

2 November 2020

Just when we thought we were saying goodbye to the Coronavirus Job Retention Scheme (“CJRS”) (the furlough scheme) and welcome to the new Job Support Scheme (“JSS”), the Government announced over the weekend that the CJRS is being extended until December and that the JSS would be suspended until then.

 

The announcement formed part of a package of measures introduced by the Government to assist businesses during the second national lockdown due to come into force on Thursday (5 November) and last until 2 December 2020. 

What are the terms of the extended CJRS?

What we know so far:

  1. Neither the employer nor employee must have benefitted from the CJRS previously in order to claim under the extended scheme.  This is new and means that an employee may now be furloughed for the first time.
  2. All employers with a UK bank account and UK PAYE scheme, regardless of size or whether they are charitable or non-profit, are eligible. 
  3. As with the original CJRS, publicly funded organisations may not claim under the scheme but partially funded organisations may if they meet certain criteria.
  4. Employees must have been on the employer’s payroll by 23:59 on 30 October 2020 in order to be eligible. This means that a Real Time Information (RTI) submission to HMRC in respect of that individual must have been made on or before 30 October 2020.
  5. Employees on “any type” of contract are eligible (so those on temporary or zero-hour contracts are included, as before).
  6. Flexible furlough will continue, so employers can furlough employees on a part-time or full-time basis (though each short term arrangement must apply for at least seven consecutive days).
  7. Employers will have to pay employees for hours worked as normal.
  8. For hours not worked, the position under the extended CJRS is as it was in August.  That is:
  • the Government will pay 80% of employees’ wages subject to a cap of £2,500 per month; and
  • employers will be liable to pay employer National Insurance Contributions and minimum pension contributions in respect of those employees/hours.
  1. Employers may “top-up” the CJRS grant at their discretion.
  2. Employers will be able to claim the grant upfront to cover their wage costs (as was the case under the original scheme).  However, for practical reasons (the need to update the system and the legal terms of the scheme), the grant will be paid to employers in arrears for a “short period” (there is currently no guidance on how long this is likely to be).   

 

More guidance about how the extended CJRS will work is expected in the coming days. 

Now what?

Uncertainty continues to be the one certainty in these fluid times and the extension of the CJRS still leaves many questions unanswered.  For example, will this extension have an impact on the Job Retention Bonus payable to employers who retain employees post-furlough until the end of January 2021?  Will there be a window of time within which employers may re-employ staff who have recently been made redundant in anticipation of the closure of the CJRS and then put them on furlough?  One wonders whether the requirement that employees were on the payroll by 23:59 on 30 October 2020 (as opposed to on 31 October 2020) is a hint that this is envisaged.  It is hoped that the new guidance will address these issues in the coming days.

Employers will need to check their existing furlough agreements as a matter of urgency in order to assess whether they need to be amended to take account of the latest changes.  If changes are required, depending on the wording of those agreements, these will need to be agreed with the employees.

Similarly, any JSS agreements put in place in anticipation of the CJRS closing on 31 October 2020 will need to be suspended and/or replaced.

Employers should also be mindful of the impact this uncertainty will undoubtedly be having on their employees, not just in relation to employment but generally due to the lockdown measures.  Clear and continuous communication to staff and willingness by managers to listen and offer support wherever possible will be critical in navigating through the weeks ahead.

FURTHER INFORMATION 

If you would like any further information or advice about the issues explored in this blog, please contact  Andreas White or another member of  our Employment team.

 

ABOUT THE AUTHORS

Andreas is a partner in our employment team.  He has substantial litigation experience, with a particular focus on complex and high value employment and partnership disputes. Andreas has a particular interest in international and cross border employment law. He is a former president of the labour law commission of AIJA.  

Özlem is very experienced in giving training talks on topical employment law issues and, as a member of the Employment Lawyers' Association (ELA), has participated in preparing ELA’s response to Government consultations on various issues.

 

 

 

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