Extension to the furlough scheme

Posted by Andrew Masters

Partner & Head of Employment

Whether you call it a second wave or one continuous storm, Covid-19 remains at the forefront of most employers' minds as we approach the end of 2020. Following the Government’s decision to impose further national restrictions with Lockdown 2, it has again said employees should work from home if they can, in stark contrast to the summer push to get them back in the office. More staff must also now wear masks in the workplace to stem the rise in infections.

The Government has confirmed that the Coronavirus Job Retention Scheme (CJRS) – furlough scheme - has been extended beyond 31 October 2020 and will remain available to eligible employers and employees for the period up to 31 March 2021. Employees must continue to be paid in full for the time that they are working, with the CJRS covering 80 per cent of an employee’s salary for unworked hours (capped at £2,500 per month for unworked hours). The employer must continue to pay employer national insurance contributions and the employer’s pension contribution on behalf of the employee.

The latest Treasury Direction was issued on 12 November 2020 and sets out in detail how the CJRS will operate between 1 November 2020 and 31 January 2021 (a review is to take place prior to the end of January 2021 when the Government will announce what changes, if any, are to take place).

Furlough leave agreements must be in place before the start of the relevant claim period (but may be varied during the claim period). It should be sufficient to update an earlier furlough agreement, provided it is done before the employee is furloughed under the extended phase of the CJRS.

A significant difference to note when comparing the extended CJRS to previous iterations is that for furlough claim periods starting on or after 1 December 2020, an employer cannot claim for any days on or after 1 December 2020 during which the employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation).

It is also a condition of making a claim that the employer accepts that HMRC will publish information about CJRS via the internet. This includes the name of the employer and a “reasonable indication” of the amount claimed.

As a result of the extension to the CJRS, the Coronavirus Job Retention Bonus has been put on hold for now. This had previously been introduced to reward and incentivise employers who keep on their furloughed employees. The bonus was to be a one-off fixed payment of £1,000 to UK employers for each eligible employee that was furloughed and remained continuously employed through to 31 January 2021. The Government’s Job Support Scheme has also been put on hold for now.

There has recently been extremely positive news about the Pfizer/BioNTechm Covid-19 vaccine and its efficacy. There are also a number of other vaccines in the pipeline that are on course to be ready by the end of 2020, including the Oxford AstraZeneca vaccine.

The extension to the CJRS may therefore prove to be a lifeline for employers as they navigate the next few difficult months in a Covid world. It is likely to stem the flow of redundancies at least for the moment. According to the latest official statistics unemployment current stands at 1.62 million in the UK (4.8%), which probably would have been much higher had the CJRS not been extended.

Time will tell us what, if any, changes to the CJRS will take place after January 2021, whether the CJRS is to be extended further beyond 31 March 2021 and whether it ultimately satisfies the Government’s aim of saving jobs in the longer term.


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