Furlough scheme extended!

Many businesses have already made decisions to make redundancies or place staff on the job support scheme (JSS). However, after the announcement on 31 October 2020, businesses may need to review their plans and now have the option to place employees on full-time furlough or flexible furlough again.

The level of the grant will be the same as the Coronavirus Job Retention Scheme (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.

CJRS/furlough will be extended for another month, so it is likely to end in December 2020. JSS which was scheduled to come in on 1 November has been postponed until the furlough scheme ends.

It’s important to note that the extended CJRS will work in the same way as the previous scheme, with businesses being paid upfront to cover wages costs. As an employer with a UK bank account and UK PAYE scheme, you can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.

For an employee to be eligible they must have been 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. The same principals apply as before in relation to the eligibility of employees claiming under the CJRS:

• Employees can be on any type of contract. This includes casual/zero-hour workers. Employers have the freedom of agreeing any working arrangements with employees.
• Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period.
• When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
• 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.

Employers can choose to “top up” employee wages above the CJRS grant. There is unlikely to be a gap in eligibility for support between the previously announced end date of CJRS and this extension.

Further information guidance is awaited. However, in the meantime, if employers consider that they may need to place staff on furlough again then they need to repeat the process. They should seek agreement from staff to be placed on furlough/flexible furlough. It is advisable for employers to provide their employees with a letter seeking their agreement or a written agreement.

If employers have already sent out letters/agreements to employees regarding the JSS and they consider that placing employees on the CJRS would be more appropriate, then it is advisable to speak to the employees, discuss the new developments and seek their agreement to be placed on furlough instead.

It is vital that employers communicate openly with their employees, in these circumstances.

For further information on the CJRS or furlough contact our employment lawyers by email contact@davenportsolicitors.com or by phone 0207 903 6889.