As England entered a second period of lockdown on 5 November 2020, the Chancellor unexpectedly announced that the already extended Coronavirus Job Retention Scheme (CJRS) would continue to run beyond 2 December 2020, through to 31 March 2021.
This is clearly a welcome update in the current climate. However, it also means that an employee may potentially be on furlough leave for over a full year, as the scheme’s claim period originally ran from 1 March 2020.
The Chancellor also announced that the £1,000 Job Retention Bonus, due to be paid to an employer for each furloughed employee still employed on 31 January 2021, would be scrapped and replaced at a later date.
From what we currently know of the extended furlough scheme, the key points to be aware of are:
- Employees must have been on the PAYE payroll on 30 October 2020 to be eligible.
- Those employees made redundant after 23 September 2020 can also be re-employed and placed on furlough leave.
- Employers will be required to cover national insurance contributions and employer pension contributions and the government will pay 80% of an employee’s wages up to a cap of £2,500 per month.
- The level of the government’s contribution will be reviewed in January 2021 and may well be reduced, depending on the economic climate at that time.
- Employers can seek to furlough an employee regardless of whether they were previously furloughed and seek to rely on the scheme even if the employer has not previously used the CJRS. It is not yet clear whether any cap will apply to limit claims to the number of employees previously furloughed.
- Flexible furlough can still be used, by agreement. This means that employers can pay employees for working agreed part-time hours whilst also relying on a furlough grant to pay employees for their unworked/furloughed hours.
- This extension of the CJRS will also apply to employers in Scotland, Wales and Northern Ireland, despite the devolved nations having varying lockdown rules.
As was the position previously, any employer seeking to rely on the CJRS must do this by written agreement with its employees. Given the changes made, employers looking to utilise this extension to the CJRS are also advised to re-visit their existing furlough agreements and to check or extend these accordingly. Please contact our Employment Team if you need any assistance with your furlough agreements.
Guidance on this extension to the CJRS has not yet been published but this is expected to follow on 10 November 2020. We will continue to provide updates once this is received.
For any queries in the meantime, you can reach our Employment Team on 0161 941 4000.