The Chancellor of the Exchequer, Rishi Sunak announced on 17 December 2020 that the Coronavirus Job Retention Scheme (CJRS), also referred to as the "furlough scheme" would be further extended until 30 April 2021 in the light of ongoing restrictions to help businesses that have been adversely affected by the COVID-19 pandemic.
Full details of the scheme extension were released in November. The Coronavirus Job Retention Scheme was due to end on 31 October 2020 and be replaced by the Job Support Scheme (JSS), which was scheduled to come into place from 1 November 2020. However, due to further restrictions, the Job Support Scheme has been put on hold, and the Coronavirus Job Retention Scheme has been extended until 30 April 2020. In addition, the Job Retention Bonus – a £1,000 one-off payment to firms to retain previously furloughed staff has also been put on hold.
Changes for employers
For employers, the scheme extension is very similar to the initial furlough scheme, and many of the points you need to be aware of are the same as those that were in operation from March through to August. However, as many employees were under the impression their furlough period wouldn't go beyond October 2020, there are a few best practice points to consider:-
- Employers still need to agree with employees that they will remain or go onto the furlough scheme. Employers must confirm this with the employee in writing if they do not, then they may not be eligible to claim the grant from the Government.
- In a change to the original scheme, an employee doesn't need to give a formal written response to furlough. However, it is good practice to keep precise records for all furloughed employees; therefore, a written or email response is helpful. From an employment law perspective, showing consent is always advisable to mitigate the risk of any claims in the future. These records should be kept for six years for HMRC.
- If an employee hasn't previously been furloughed, new calculations are applied for their pay and working hours. The Government website outlines how to calculate these for each individual employee and their unique circumstances.
- Employers can then claim 80% of the employee's salary as a grant from HMRC. For claims up until January 2021, the 80% is capped at £2,500 per employee. The Government could review the percentage for February and March, so please keep an eye out for updates.
- Employers are still liable to pay National Insurance Contributions and pensions for each employee.
- Claims relating to individual months should be submitted by day 14 of the following month i.e. claims relating to January, should be submitted by 14 February.
- Employers can 'top-up' the furlough for their employee's if they choose to do so.
- The furlough scheme is flexible, meaning employees can continue to do work for the business. The furlough scheme covers 80% of the hours employees do not work.
The new policy outlining all the furlough scheme's detail gives clear guidance on some of the more grey areas of the initial furlough scheme. This includes the clarification that employers can furlough employees who are shielding or employees who live with someone who is shielding in line with the public health guidelines. The policy also advises that employees who are responsible for caring for someone due to coronavirus can be furloughed - this includes child care responsibilities.
There is also further clarification around employees on furlough taking annual leave and public holidays, particularly in the run-up to Christmas and the new guidance around the tier systems. The Government guidance states "Workers who have been placed on furlough continue to accrue statutory holiday entitlements, and any additional holiday provided for under their employment contract."
It is advisable to check ACAS's guidance on holiday for furloughed employees too, as this is the guidance that will be used in any employment tribunal claims as a result of the pandemic.
It is essential employers understand their legal obligations to avoid allegations of furlough fraud or employment tribunals - which could be extremely costly both financially and to business reputation.