Coronavirus Job Retention Scheme Extended
As part of the latest lockdown restrictions, the Prime Minister announced on 31 October 2020 that the Coronavirus Job Retention Scheme (the “CJRS”) was going to be extended to December 2020. It was actually due to end on that day and be replaced by the new, less generous, Job Support Scheme (“JSS”). In a somewhat surprising further development, the Chancellor, Rishi Sunak, announced on 5 November 2020 that the CJRS shall now remain open until the end of March 2020.
We have updated our last briefing to summarise the latest position.
Terms of the Coronavirus Job Retention Scheme extension
- The CJRS will be extended until 31 March 2020.
- The amounts which employers can claim under the CJRS from November 2020 until the end of January 2021 shall return to the more favourable levels which were available when the CJRS was first implemented, i.e. employers will be able to claim up to 80% of an employee’s pay (capped at £2,500 per month), although employers will still be responsible for tax, national insurance contributions and pension contributions.
- For February and March 2021, the Chancellor has said that the levels of support shall be reassessed. We suspect that the levels will be tapered off, as they were when the original scheme was due to wind down.
- Employers can continue to “top-up” salaries to an employee’s normal rate (although they are not obliged to).
- Neither the employer nor the employee needs to have previously used the CJRS to be eligible for the extended scheme. However, to be eligible, the employee does need to have been on the employer’s payroll before midnight on 30 October 2020 (with a Real Time Information submission notifying payment for that employee to HMRC having been made on or before that date).
- Employees who have previously been furloughed shall continue to have their reference pay and hours based on their existing furlough calculations. For employees using the CJRS for the first time, employers will be asked to use a new reference period.
- Employees who were made redundant on 31 October 2020 (i.e. the date that the CJRS was due to end) can be re-hired and re-furloughed. However, there are wider implications for employers re-hiring employees (i.e. extending an employee’s length of service to afford them greater employment rights) so thought should be given to this first.
- It is possible for employees to be “flexibly” furloughed during the extended period (i.e. work part-time and be furloughed for the remainder). In such circumstances, the employer will be responsible for the wage costs in respect of the worked hours and only able to claim under the CJRS for the furloughed hours.
- Employees can be furloughed if they are shielding in line with public health guidance (or need to stay at home with someone who is shielding).
- The JSS will not come into force, although it might be introduced at a later stage. In addition, the job retention bonus, which was due to award employers £1,000 for each employee they brought back from furlough and kept in employment until January 2021 has been put on hold.
What steps should employers take?
It is important for employers wishing to take advantage of the CJRS extension to communicate their plans with staff. This will naturally be an unsettling time for employees and clear communication will be key. Employers should also act fast in deciding whether to re-hire any employees who were made redundant on 31 October 2020 and prepare an agreed communication to be sent to any former employees who contact them asking to be put back on furlough.
Under the CJRS it is important that employers have written agreements in place documenting the terms of the furlough arrangements. In most cases, these arrangements will be envisaged up until 31 October 2020, so new agreements should be put in place as a matter of priority.
Having been told numerous times that the CJRS would not be extended, the Prime Minister’s and Chancellor’s announcements have come as a surprise to many. Whilst the timing of the announcements was very unfortunate, the extension of the CJRS is more favourable to employers (compared to the level of support that would have been available under the JSS), so is welcomed from that perspective and we suspect many employers will take advantage of the extended scheme.
As with the original CJRS scheme, further guidance will be made available and regularly updated on the gov.uk website. This will address the technical queries about how employers can make claims. We advise that employers using the extended CJRS regularly check for updates.
If you have any queries on the extension to the CJRS please contact Joe Beeston, Senior Associate in our corporate team.
This note reflects our opinion and views as of 5 November 2020 and is a general summary of the legal position in England and Wales. It does not constitute legal advice.
Many employers have sadly needed to make redundancies in recent months due to the pandemic and with the Coronavirus Job Retention Scheme coming to an end at the end of October 2020 and the new Job Support Scheme only filling part of the void, this trend will likely continue. This article provides a useful summary of the key considerations for employers who are contemplating a headcount reduction.