The government has extended the Coronavirus Job Retention Scheme (‘CJRS’) aka 'furlough scheme' until 31 March 2021. The newly extended CJRS is more generous than the furlough scheme that has been running over the last 2 months, however the amount of the grant may be reduced for February and March 2021.
Key details of the newly extended CJRS:
eligible employees can be placed on furlough leave instead of being dismissed or laid off;
no requirement for either the employer or employee to have used the CJRS previously;
employers have the option of full furlough, where the employee does no work for the employer, or flexi-furlough - where the employee can have a mixture of non-worked and worked hours:
employers can claim 80% of pay for non-worked hours capped at £2,500 pcm;
employees will be able to work part of their usual hours, with the employer paying for such worked hours in the usual way (as well as tax and employer's NICs and minimum automatic enrolment employer pension contributions on those worked hours);
the CJRS scheme will be reviewed in January 2021 and if economic circumstances have improved enough employers may be asked to contribute more, so the 80% government grant may not last for the entire duration of the extension (until 31 March 2021);
eligible employees are those who were on an employer's PAYE payroll by 23:59 on 30 October 2020 (a PAYE Real Time Information (“RTI”) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020);
to claim 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;
whilst on CJRS employees continue to accrue continuous service/annual leave and can take annual leave during furlough leave, but the employer must 'top-up' their wage during any such leave;
employees who have previously been furloughed continue to have their reference pay and hours based on the existing furlough calculations. Those employees who have not previously been furloughed will have a different pay/hours reference period;
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);
whilst there is no legal obligation on employers to re-hire former employees, employees that were employed and on the payroll on 23 September 2020 who have since been made redundant or stopped working for their employer after that date can be re-employed and put onto the CJRS. The PAYE RTI submission notifying payment for those employees to HMRC must have been made on or before 23 September 2020;
employers must have confirmed to their employees (or reached collective agreement with a trade union) in writing that they have been furloughed or flexibly furloughed;
employers must ensure that the furlough agreement is consistent with employment, equality and discrimination laws, retain a written record of it for 5 years and keep records of how many hours their employees work and the number of hours they are furloughed (for example, not working), for 6 years;
the terms of any furlough agreement must reflect the hours the employee has actually worked or not worked over the period of the agreement and must allow the employer to satisfy the terms of CJRS so they can make a claim in relation to hours not worked;
employers can retrospectively furlough employees with effect from 1 November 2020 so long as the agreement to retrospectively claim furlough is put in place on or before 13 November 2020;
the Job Support Scheme and the Job Retention Bonus have been put on hold for the time being;
Check the Guidance to see which employees you can put on furlough to use the CJRS.
Many employers made redundancies during September and October factoring in the expected termination of the CJRS at the end of October 2020 and referring to this as part of their rationale for redundancies and/or the timing of them. It would be prudent for any employers with an ongoing redundancy process – i.e. where employees have not yet been given notice of dismissal - to pause and consider carefully the implications of the extended CJRS for their business before proceeding further with the redundancy process.
The guidance to the new CJRS states that “The government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November." It appears from this that if you are an employer who is currently considering dismissing any furloughed employees for redundancy (or any other reason), it would be prudent to issue notice of dismissal before 1 December otherwise you may not be able to claim under the CJRS in respect of any of the notice pay.
We anticipate that many employees will be challenging the fairness of any decision to dismiss them for redundancy prior to 31 March 2021 - the end of the newly extended CJRS. Accordingly businesses should consider very carefully whether the newly extended CJRS will provide sufficient support in order to retain employees until trading conditions have improved and, as always, be prepared to explain the basis for any dismissals, as well as the dismissal process followed.