As part of its decision to introduce a second lockdown of at least four weeks in England, the government has also extended the Coronavirus Job Retention Scheme (CJRS), otherwise known as the furlough scheme.
The Job Support Scheme (JSS) which was scheduled to come in on 1 November 2020, is now postponed as is the Job Retention Bonus. Both have been put on the back burner in favour of the new extended CJRS, which is now due to remain in place until 31 March 2021.
The extension of the scheme will be welcome news for some employers but means that they will have a number of matters to consider before taking advantage of the new scheme.
This article sets out a summary of the most recent CJRS rules and the key steps an employer should take when claiming under the new scheme.
CJRS – the updated position
- Employers can claim whether their businesses are open or closed, though the guidance states that the scheme is aimed at employers whose workforce has been affected by COVID-19.
- Flexible furlough will continue to be available (where employees are able to work part-time, with the employer claiming the grant for hours not worked), as well as full-time furlough.
- Employees need not have been on the previous furlough scheme; the new scheme is available for all employees who were on the employer’s PAYE payroll by 23:59 on 30 October 2020, as well as employees who were made redundant or stopped working on or after 23 September 2020, if they are then rehired.
- For claim periods running up to 31 January 2021, the government grant will contribute 80% of furloughed employees’ wages, up to a cap of £2,500 per employee per month. The scheme will be reviewed in January 2021 to decide whether employers will be required to make a contribution thereafter.
- Employers will pay employees for the time worked, as usual. Employers will be required to pay National Insurance Contributions and pension contributions in respect of furloughed employees.
- Employees can be rotated on and off the scheme, but not for periods of less than seven days. Employers will need to report and claim for a minimum consecutive seven-day period.
- Furloughed employees continue to accrue holiday and can take holiday whilst on furlough. Any holiday would need to be paid at the employee’s normal full pay prior to furlough.
- As previously, employers can choose to top up employees’ wages above the CJRS grant, if they wish.
- 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.
- HMRC intends to publish the names of those employer companies and LLPs that have made claims under the extended CJRS scheme, for the month of December 2020 onwards.
- Employers can still make redundancies during the furlough period if there is a genuine redundancy situation. Usual redundancy procedures apply.
- The government is reviewing whether employers can claim for employees serving notice and will change their approach for claim periods starting on or after 1 December 2020.
For further details see the gov.uk website. Further guidance is expected in late November.
Key steps for an employer
Keep a paper record and ensure all arrangements and terms are confirmed in writing:
- Write to your employees as soon as possible. If the JSS was previously put in place, inform them that is being postponed and the extended furlough scheme will replace it for now.
- Decide on which (if any) employees will be working full time, be on flexible furlough and which will be on full-time furlough. Keep a note of your written reasons for your decisions, and make sure they are not discriminatory.
- Consider whether you will top up salary and whether you would like the employees to use up any holiday entitlement during their furlough period.
- It is important to note that any reduction in pay or benefits or change in working hours is a change in the terms and conditions of employment and usual employment law will apply (consent, duty to consult, etc.).
- Agree the new furlough arrangements with your employees and confirm the details in writing, in the form of an agreement or letter. Employees do not need to provide a written response confirming their agreement to the terms.
- Employers can agree retrospectively to furlough someone with effect from 1 November 2020, as long as the agreement to retrospectively claim furlough occurs on or before 13 November.
- Keep a record of the agreement for at least five years and document all worked and all furloughed hours for each employee.
- Continue to keep a record of all claims made and all relevant paperwork so records can be produced if requested by HMRC in future.
- Finally, but importantly, explain to your employees that you are following the government guidelines; the yo-yo approach that is being taken with regard to their work and pay is not your doing. Encourage dialogue, show empathy and care, offer help and assistance where possible, and above all, be kind.