Another – Longer - Extension to the Furlough Scheme

The Government announced shortly after midday today that the Coronavirus Job Retention Scheme (CJRS) is now extended until 31 March 2021.

Introduction

Following the announcement on Saturday, 31 October 2020 of a month’s extension to the CJRS, a further extension to 31 March 2021 has been announced today. A policy paper has also been issued providing further detailed of this extension of the CJRS and which indicates that yet further guidance on the extended CJRS will be issued on 10 November 2020. An economic factsheet has also been issued. Whilst many of the terms and conditions of the CJRS remain unchanged, the key points to note regarding its extension are as follows.

Important deadline for retrospective agreements

Employers should pay particular attention to the deadline of 13 November 2020 for introducing retrospective agreements with their employees to utilise the extended CJRS in the relation to the period from 1 November 2020, the date from which the extended scheme applies.

Which businesses can utilise the extended CJRS?

An employer can claim whether its business is open or closed and does not need to have previously used the CJRS to be able to access the extended CJRS.

Timing of claims

Claims under the extended CJRS can be made from 8 am Wednesday, 11 November 2020.

Claims can be made:

• In respect of an employee for a minimum 7 day claim window and can be made in advance - in arrears for the period from 1 November 2020 to 11 November 2020, from the week commencing 9 November 2020.
   
• Claims for November 2020 must be submitted by 14 December 2020.Employers that utilised the CJRS prior to its extension with effect from 1 November 2020 should note that the deadline for claims in relation to the period up to and including 31 October 2020 remains 30 November 2020.

How much of the employee’s wages will the Government grant cover?

For claim periods running to January 2021, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The £2,500 cap is proportional to the hours not worked.

The Government will consider in January 2021 whether employer contributions towards the CJRS will be changed. Until then, employers will only have to cover National Insurance and employer pension contributions in respect of payments made to eligible staff.

The calculation of usual wages and hours will remain unchanged for those employees who were previously eligible for coverage by the CJRS.

For employees who were not covered by the CJRS previously, employees hired after 20 March 2020 and “new employers” a new reference period will be introduced by the guidelines to be issued on 10 November 2020.

Which employees are eligible and are they allowed to work part time?

The extended CJRS can be used for employees who were not previously placed on furlough.

It is possible to re-hire employees who have been made redundant or stopped working for their employer and utilise the extended CJRS provided that any such employee was employed and on the employer’s payroll on 23 September 2020 - and the employer must have made a PAYE Real Time Information (RTI) submission to HMRC from 20 March 2020 to 23 September 2020 in respect of such employee(s).

Otherwise, claims can only be made in respect of employees who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

It remains possible for employees to work part time on “flexible furlough” under the extended CJRS. The policy paper confirms that this means employees can work for any amount of time, and any work pattern and claim the grant for the furloughed hours.

What arrangements must employers put in place?

The policy paper states that employers must discuss the proposed arrangements with staff and make changes to their employment contracts by agreement. Whilst the agreement must be confirmed in writing, the policy paper provides that an “employee does not have to provide a written response”. However, securing the relevant employees’ written consent (which can be by email) will of course avoid any argument that an agreement has not been reached and may well be the most prudent way in which to proceed.

Agreements can be retrospective with effect from 1 November 2020 – provided they are “put in place” up to and including 13 November 2020. This means employers will need to act with speed to secure agreements with employees if they wish to claim retrospectively for the period from 1 November 2020.

As before, a record of the relevant agreements must be retained for 5 years and employers must also keep records of the hours the relevant employees work (and do not work) which must be retained for 6 years.

Shielding and caring responsibilities

Employees can be furloughed where they are unable to work because they are shielding in line with public health guidance (or need to stay at home with someone who is shielding) or have caring responsibilities resulting from coronavirus - this includes employees that need to look after children. The policy paper confirms that the CJRS is not intended for short-term sickness absences.

Furloughed employees who become ill, due to coronavirus or any other cause, must be paid at least Statutory Sick Pay (SSP). As under the CJRS previously, it is up to employers to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate.

Publicity

HMRC will publish details of employers who make claims under the extended CJRS, starting from December 20 – details of this approach will be set out in the impending guidance. This may influence employers to consider whether it is appropriate reputationally to rely on the extended CJRS.

What has happened to the Job Support Scheme and the Job Retention Bonus?

Both the Job Support Scheme and the Job Retention Bonus have been postponed. The Job Retention Bonus, originally due to be paid in February 2021, “will be deployed at the appropriate time”.

Conclusions

Readers of our regular updates on the CJRS will be unsurprised to hear that there they should keep an eye out for the further guidance due to be issued on 10 November 2020 and any further Treasury Direction setting out the legal basis of the extended CJRS. Employers will therefore need to be ready to make further changes to their CJRS arrangements in order to ensure that their claims remain valid.

In the meantime employers need to:

• Consider, if they extend their use of the CJRS, whether their existing documentation is appropriate and implement any appropriate adjustments to the agreements they have in place with regard to the duration (and termination) of furlough, the use of flexible furlough or otherwise (including the cancellation or amendment of any arrangements they had agreed in relation to the now suspended Job Support Scheme).
   
• Decide whether employees who have been dismissed recently can and should be brought back onto furlough, an option which it may be easier to justify - in terms of the proper use of the CJRS - and to agree with employees now the CJRS is extended to the end of March rather than for just one month.