The Chancellor, Rishi Sunak has announced the government will extend the furlough scheme until March, providing 80 per cent of employees’ wages for those unable to work because of companies being forced to close due to England’s’ second lockdown.
The CJRS (also known as the furlough scheme) will remain open until 31 March 2021. 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 planned £1,000 job retention bonus for any furloughed worker kept in a job until February is being postponed to a later date. An income support grant for self-employed people, covering the period November to January, will also increase from the planned 55% to 80% of average profits up to £7,500.
Mr Sunak told the House of Commons that his highest priority was “to protect jobs and livelihoods” and recognised that businesses and families wanted “certainty” over the months ahead.
Full guidance on the CJRS extension will be published on Tuesday 10th November. In the meantime, the government has published the following:
A factsheet on financial support for jobs
A policy paper on the JRS extension
What we know so far…
- The CJRS will now remain open until 31 March 2021.
- In common with the CJRS up until now, eligible employees will receive 80 per cent of wages for hours not worked, up to a maximum cap of £2,500 per month.
- Employers will only need to contribute employer National Insurance Contributions and pension contributions, and (for now) will not be asked to contribute to wage costs for hours not worked. This mirrors what was in place until August and so is more generous than the scheme has been over the last couple of months. The government will review this in January 2021 to decide whether economic circumstances are improving enough to ask employers to contribute more.
- Employers and employees do not need to have used the CJRS previously. Employers can claim for employees who were employed and on their PAYE payroll on 30 October 2020. If an employee was made redundant or stopped working before that date, then provided they were on payroll on 23 September, they can be re-employed and furloughed under the scheme (although there is no obligation on employers to do so and this opens up a whole heap of other employment law considerations – we need more guidance).
- Employers can claim whether their businesses are open or closed.
- Employees who are unable to work because they are: shielding; need to stay at home with someone who is shielding: or who have caring responsibilities as a result of coronavirus, can be furloughed.
- As with the previous scheme, employees cannot work for their employer during any hours when they are on furlough (though they can take part in training or work/volunteer for another employer). However, flexible furlough – where an employee works some hours and is furloughed the rest – will be possible. Employers will remain responsible for paying wages in full for any hours worked if an employee is flexibly furloughed. The 80 per cent rule will apply to the rest of the employee’s normal working hours.
- Employers should discuss furlough arrangements with their staff and must have confirmed to their employees in writing that they have been furloughed or flexibly furloughed. No written response is required by employees.
- Claims for November can be made from 8am on Wednesday 11 November and must be submitted by no later than 14 December 2020. As before, the minimum claim period is seven consecutive calendar days. The deadline for claims up until 31 October remains 30 November.
- The government’s policy paper sets out details for how claims should be calculated, including new reference pay calculations for employers and employees who have not previously used the scheme.
- As a result of this announcement, the Job Support Scheme has been postponed. The Job Retention Bonus will also not be paid in February 2021 as planned, although the government states that “a retention incentive will be deployed at the appropriate time”.
- Communication with staff is crucial
- Furlough/flexible furlough agreements should be prepared
- Employees accrue holiday whilst furloughed but can be asked to take during furlough subject to sufficient notice
- Financial planning is critical still
- We don’t have all the guidance yet – 10 November!
ViewHR will keep you posted as soon as further guidance is released. In the meantime, if you have any questions or require documentation, please don’t hesitate to contact a member of the team.