Employment Law Update – Furlough Scheme Extended

The Chancellor, Rishi Sunak, has confirmed that the Coronavirus Job Retention Scheme (CJRS) (also known as the furlough scheme) will be further extended until the end of March 2021. The Chancellor had previously confirmed that the furlough scheme would continue to be temporarily available during England’s national lockdown which is set to be in place from 5 November 2020 to 2 December 2020.

What are the terms of the extended CJRS?

The extended CJRS will be on the same terms as that in August, meaning the government will subsidise up to 80% of an employee’s salary (capped at £2,500 (gross) per month) and the employer will continue to be responsible for the pension and NI contributions.

Flexible furlough will continue to be permitted so employees can work part-time and receive a grant for unworked hours. Employers will pay wages for hours worked and can claim for the furloughed hours.

Full guidance is being provided on 10 November 2020. In addition, the CJRS will be reviewed again in January 2021 to determine whether circumstances have improved to a point where employers can be asked to contribute more towards paying employees’ salaries. This suggests that the 80% government subsidy may not last for the entire duration of the extended scheme.

Who is eligible for the extended CJRS?

All employers across the UK will be eligible to claim under the CJRS; there is no requirement for them to have used the CJRS previously or for the relevant employee to have been furloughed previously. There will be a different calculation available for newly furloughed employees. Further details can be found here.

To be eligible to claim under the extended CJRS, employees must have been on an employer’s PAYE payroll on 30 October 2020. This means a Real Time Information submission notifying payment for that employee to HMRC must have been made between 20 March 2020 and 30 October 2020.

Employers can re-hire and claim for employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for them. To claim for such employees, 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.

The Chancellor has confirmed that employers can furlough employees who have caring responsibilities from coronavirus or are shielding in line with public health guidance. There is no obligation on the employer to furlough such employees and employers should remember that any furloughed employee who becomes ill must be paid Statutory Sick Pay (SSP).

What about the Job Retention Bonus?

The government had previously agreed to pay employers a £1,000 bonus per employee if they had brought an employee back from furlough and kept them in work until the end of January. With the CJRS being extended beyond January, the government has decided not to pay the Job Retention Bonus (JRB) as the policy intent of the JRB no longer applies.