Back to Furlough: Government postpones introduction of Job Support Scheme and extends the Coronavirus Job Retention Scheme

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Back to Furlough: Government postpones introduction of Job Support Scheme and extends the Coronavirus Job Retention Scheme

Published 2 noviembre 2020

The Government like to keep us on our toes. On Friday evening it published 11 sets of Guidance for the Job Support Scheme (JSS), which was due to come into force yesterday (1 November). Just as employers were getting to grips with JSS, on Saturday, as it announced a new English lockdown from 5 November, it announced that the introduction of the JSS would be postponed. Instead the furlough scheme, the Coronavirus Job Retention Scheme (CJRS), which was due to end on 31 October will be extended for a further month.

HM Treasury issued a press release on 31 October and intends to issue further Guidance on the extended CJRS before 5 November, however, this is what we know so far:

  • We understand the extended CJRS is in force now.  This should be confirmed in the Guidance but our understanding is that it began on 1 November and the Government has stated it will run “until December”. The precise end date is unclear, but we expect it will continue at least whilst the English lockdown restrictions are in place - currently until 2 December.
  • The extended CJRS is UK wide so will also be available to businesses in Scotland and Wales who are currently subject to different restrictions than businesses in England.
  • The JSS has not been abandoned but its introduction has been postponed until the CJRS ends.

Financial support:

  • The level of support for employers under the extended CJRS is more generous than the JSS. It is also more generous that the support that was available in October under the CJRS. For October, the maximum government contribution under the CJRS was 60% of normal pay (up to a cap of £1,875) and the employer contribution was 20% (up to £625). However, the extended furlough scheme will reflect the CJRS in August, so the Government contribution will be 80% of wages up to a cap of £2,500 and employers have to pay employer NICs and pension contributions for the hours the employee does not work. As before, employers can choose to top up employee wages but do not have to do so.

Flexibility:

  • Flexible furlough is allowed under the extended CJRS; businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time. For worked hours, employers must pay employees according to their employment contract and will be responsible for paying the tax and NICs due on those amounts.

Eligibility:

  • In terms of eligibility for the extended scheme, neither the employer nor the employee needs to have previously used the CJRS.
  • All employers with a UK bank account and UK PAYE schemes can claim the grant, although as with the original CJRS the government expects that publicly funded organisations will not use the scheme. Partially publicly funded organisations may be eligible where their private revenues have been disrupted.
  • The scheme is available in respect of employees, on any type of contract, who were on the employer’s PAYE payroll by 23:59 on 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020. This will be welcome news for both employers and employees. Since July, employees have only been eligible for the CJRS if they had been furloughed for a period before 30 June. Now those employees who had been excluded over the summer will be eligible under the extension, as well recent starters.

Calculations and operation of the scheme:

  • Employers can claim the grant for the hours that their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology employers will be used to from the CJRS, with further details expected in the Guidance. When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of seven consecutive calendar days.
  • In terms of practicalities, the press release states that businesses will be paid upfront to cover wages costs, however, there will be a short transition period whilst they update the scheme and businesses will be paid in arrears for that period. The Government will confirm shortly when claims can first be made in respect of employee wage costs during November but states that there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

Clinically extremely vulnerable employees:

Clinically extremely vulnerable employees were required to shield during the first national lockdown. If they were unable to work from home, the employer was able to furlough them. However, from 1 August 2020, such employees were told they were able to return to work where they could not work from home (provided that their workplace was Covid-secure and they were offered the safest available role so they could maintain social distancing).

The new Guidance on the national restrictions from 5 November reverses this position. Clinically extremely vulnerable employees are “advised” to work from home over the period of lockdown. If the employee cannot work from home the Guidance says that such employees are now advised not go to work and may be eligible for Statutory Sick Pay or Employment Support Allowance. We would expect that such employees can also be furloughed under the extended furlough scheme as before, however, this is currently unclear. We expect fuller details on this in future Guidance.

What does this mean for employers?:

Whilst the extension of the furlough scheme on a more generous basis will be welcomed by employers, the last minute announcement will mean many employers will have already made redundancies in anticipation of the scheme ending. It is unclear at this stage whether employers will have flexibility to re-engage those who have recently been made redundant.

As with previous versions of the CJRS, employers will need to have employee agreement to furlough employees and use the scheme. For those employees who were furloughed in October employers should still clearly set out the figures and working arrangements relevant to the new extension and obtain employee agreement. Some businesses may have already put in place JSS agreements in anticipation of the closure of the CJRS and the launch of the JSS on 1 November. Those businesses should contact affected employees as soon as possible to ask them to agree to continue on furlough under the extended scheme instead.

We have advise extensively on the CJRS and JSS and therefore can assist clients with the practicalities of the new lockdown. Please contact Louise Bloomfield or your usual DAC Beachcroft contact.

 

Key Contacts

Louise Bloomfield

Louise Bloomfield

Leeds

+44 (0) 113 251 4717

Joanne Bell

Joanne Bell

Manchester

+44 (0) 161 934 3179

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