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With just hours to go until the end of the Coronavirus Job Retention Scheme (CJRS) on 31 October 2020, the government announced that it would be continuing the scheme until December as a new national lockdown looms.
The Job Support Scheme, which was designed to replace the CJRS and would have commenced yesterday (1 November 2020), has been postponed and will likely not be implemented until the CJRS finishes. The CJRS is now stated to last “until December”, which may mean it ends on Monday 30 November or it may last the course of the new lockdown, expected to run from Thursday 5 November to Wednesday 2 December. We await clarification on this point.
The government will pay 80% of wages up to a cap of £2,500 per month, as it did in August. However, employers using the scheme will be asked to cover the employer National Insurance and pension contributions. In October, the maximum government contribution was 60% (capped at £1,875), so this marks a welcome increase for employers.
Flexible furlough remains an option that an employer can utilise under the scheme, instead of placing an employee on furlough full-time.
Access to the CJRS has been widened. A press release by the Treasury has clarified that neither the employer nor the employee is required to have used the CJRS in previous months, which means that organisations which may have previously been prevented from using the furlough scheme can now consider this as an option in November to assist with staff costs. The scheme is open to employees who were on the PAYE payroll before midnight on 30 October 2020. This will no doubt help those organisations with new starters or employees who had only been eligible for the Job Support Scheme previously.
As before, employers can claim the government contribution of 80% (capped at £2,500) on hours that their employees do not work. When claiming the CJRS grant for these furloughed hours, employers need to claim for a minimum period of seven calendar days, whilst employers must continue to pay employees for any hours worked in the normal way. As was the case previously, employers may pay furloughed staff 100% of their normal wages, by topping up the government’s 80% contribution, or they may seek to agree to a pay cut with furloughed staff.
The sudden nature of this announcement leaves some unanswered questions for employers. It is not currently clear if employers can re-hire employees to give them access to the extended furlough scheme. Many employers will have been in the midst of redundancy consultation processes when the announcement was made, or may well have already made employee redundant, to tie in with the original end of the CJRS on 31 October. The original furlough scheme allowed employers to re-employ staff that had been made redundant before its commencement, so we may see this option offered to employers again.
It is also uncertain as to how the extended CJRS will tie in with the Job Retention Bonus. Under the existing Job Retention Bonus rules, an employee must hold their job and be paid a prescribed minimum rate for November, December and January. We will need to wait and see whether furlough pay can contribute to this minimum rate or whether this scheme will be postponed alongside the Job Support Scheme or amended in some way.
For any businesses that have already sent communications out to employees to set them up on the Job Support Scheme, we recommend that they update affected employees as soon as possible to explain the last-minute postponement of that scheme. At the same time, employers will need to consider whether they will place employees onto the CJRS instead and seek to agree on this with relevant employees.
We will continue to update you as the government issues more information about the resumption of the Coronavirus Job Retention Scheme.