On 7 August and 15 September, the Chancellor categorically ruled out an extension of the furlough scheme beyond 31 October. On 24 September, the Job Support Scheme was introduced to replace furlough as of 1 November. On 22 October, a wait of over a month, the government released some of the rules surrounding the Job Support Scheme, resulting in employers rushing through agreements for staff to go on to the Job Support Scheme as of Sunday morning. At approximately 6.45pm on Saturday evening (Halloween no less) the Prime Minister announced that the Job Support Scheme was being postponed for at least a month, that there would be a month long lock-down but that furlough would be extended- trick and treat?
It is a very difficult time to be a business owner, an HR professional and an employment lawyer!
To help, at this early stage, I have set out what we know so far arising from the announcement on Saturday.
Who can claim under the extended furlough scheme?
Employers small or large, charitable or non-profit, are eligible for the extended Job Retention Scheme, which will continue for a further month from 1 November 2020. Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time, and will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs. So unlike August and September when the employer’s contribution went up, we are now back to where we were in August, with the government paying 80% of wages (subject to a cap of £2500 per month) and the employer paying pension and national insurance contributions.
All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS. This is a very important point- employers can use the new scheme to place staff who have never been on furlough on full furlough or flexible furlough, which gives an opportunity to give staff who have worked throughout a break, whilst re-integrating those who have been on full furlough.
The government expects that publicly funded organisations will not use the scheme, as has already been the case for CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.
To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
Employees can be on any type of contract- zero hours, fixed term etc.
What has happened to the Job Support Scheme?
The Job Support Scheme, which was scheduled to come in on Sunday 1st November, has been postponed until the furlough scheme ends.
How will the extended Job Retention Scheme operate?
The extended Job Retention Scheme will operate as the previous scheme did, with businesses being paid upfront to cover wages costs. The CJRS is being extended until December. The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work.
As under the current CJRS, flexible furloughing will be allowed in addition to full-time furloughing.
What will be covered by the grant?
Employers can claim the CJRS grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS. When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.
Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way.
As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.
What if we are making redundancies?
It is unclear as to how the extended furlough scheme will interact with redundancies. Under the previous scheme, employees could be consulted with regarding redundancy, be issued with notice of redundancy and serve notice during the claim period. Under the JSS it was clear employees could not be served with notice or be made redundant during the claim period, although whether they could be consulted over redundancy was not dealt with. It is assumed that the rules regarding redundancies under extended furlough will be as they were previously, but we await clarification on this.
What should we do now……..
The following steps should be taken urgently:
1) Decide staffing requirements for the next month.
2) Inform staff who were due to be on JSS that this has been cancelled by the government for at least a month.
3) Check existing furlough agreements and decide whether they can be rolled over to cover the new period, or whether agreement in writing to extend is needed (an email should suffice).
4) Decide whether to use the scheme to rotate staff who have not been on furlough and bring other staff back- if putting staff on furlough who have not been on the scheme before you will need to agree this in writing as before.
There will no doubt be further guidance released by the government in the coming weeks, but this is what we know so far.
Please note, all advice and opinion offered in this article are subject to change in line with the latest government advice.