The Continuation of the Coronavirus Job Retention Scheme
PLEASE NOTE: This article is up to date as of 10 November 2020. The Government has released numerous updates on its guidance since the CJRS came into existence in April 2020 and it is likely further updates will be forthcoming. This article is for information only and does not constitute legal advice.
The Coronavirus Job Retention Scheme (CJRS), or furlough as it is probably better known, has become synonymous with 2020. Before COVID-19 it was a word few people were probably even aware of, now it is a word we hear on a daily basis.
The Government put the furlough scheme in place to support employers and employees with the catastrophic impact of COVID-19 and the resulting lockdowns. It has been a huge help, aiming to avoid mass redundancies, although sadly many job losses have still taken place.
Furlough was due to end on 31 October 2020. This had been the Government’s stated position for months, despite pressures from unions, business and organisations such as the Chamber of Commerce and the CBI. The Government seemed so certain that furlough would end on 31 October that it introduced the proposed successor scheme – the Job Support Scheme (JSS). The Government also introduced the Job Retention Bonus which was designed to reward employers to the tune of £1000 per furloughed employee retained.
As we all know, sadly the second wave of the pandemic has and is happening. The Government announced the second national lockdown on 31 October 2020 which runs from 5 November to 2 December 2020. We are yet to know if it will be extended, or if it will work.
When Prime Minister Boris Johnson announced the second national lockdown (at around 7pm on 31 October 2020) he confirmed that, despite the furlough scheme having a mere few hours remaining, it would be extended until 2 December 2020. Chancellor Rishi Sunak went further on 5 November 2020 when he confirmed that furlough would remain in place until 31 March 2021.
Whilst many welcomed the extension of furlough, the timing of the announcement at the 11th hour did little to help planning and preparations – many businesses had to work frantically on Sunday 1 November to change their plans.
Furlough did not end but remains in place and largely the same. The details of the scheme can be viewed on Gov.uk
Further guidance was released on 10 November 2020 in particular:
In my opinion, the key features of the extension of the scheme are:
- The Government will pay 80% (capped at £2,500 per month) for any unworked hours
- Employers will still be required to pay employers’ national insurance contributions and pension contributions
- Employers can place employees on full furlough (no work) or flexible furlough (a reduced amount of hours worked)
- Employers and employees who previously did not use or were not eligible for furlough leave are able to now access the scheme
- Employees need to have been on their employer’s payroll from 30 October 2020 at the latest
- Those employees who left work (whether due to redundancy or otherwise) on or after 23 September 2020 could be re-engaged and placed on furlough leave.
- Claims can be made for employees placed on furlough on 1 November 2020 for the first time provided that there is a written agreement in place with the employee by Friday 13 November 2020.
- It appears that from 1 December 2020 employers may no longer be able to claim 80% of the value of employees’ notice periods. This had been a feature of the CJRS and made the financial burden of making employees redundant lighter for employers. More guidance on this specific issue is expected towards the end of November 2020.
- It also appears that from 1 December 2020 HMRC will publish the names of all employers accessing the CJRS.
Employers using furlough must reach a written agreement with employees being placed on full or flexible furlough. There are two main reasons for this. Firstly, the Government/HMRC can request to see it for up to five years. Secondly, full or flexible furlough will be a significant change to terms of employment and therefore to ensure that there is no dispute or disagreement employees should confirm their acceptance in writing.
The Government will review the CJRS in January 2021 and may alter the amount it will pay. At present and until 31 January 2021, it will contribute 80% towards an employee’s unworked hours. Presumably this will depend upon what the second wave of the pandemic looks like and how open the economy is.
The extension of furlough has resulted in the Job Support Scheme being suspended. It had been due to start on 1 November 2020 and run through to 30 April 2021. Only time will tell whether the JSS will ever come into existence and I believe the response and handling of the pandemic will determine this.
The Job Retention Bonus scheme has also been suspended and will now not be paid in February 2021 as planned. Much like the JSS, time will tell whether this scheme actually happens.
Furlough has and will keep redundancies and job losses down. It will help elements of the economy to be mothballed/hibernate until the pandemic comes under some degree of control. The hope being that sectors such as leisure, hospitality and entertainment will be able to emerge, whilst not unscathed, in some form of semblance when the pandemic settles down.
Unfortunately there will still be job losses – that is sadly inevitable. Employers considering redundancies need to ensure that they undertake a fair redundancy consultation process.
Full and flexible furlough will give employers options and they should consider both properly before making redundancies. A failure to consider either or both could result in a redundancy consultation process being found to be flawed and unfair by an employment tribunal.
Whilst the Government’s timing and perhaps flip-flopping is frustrating and has made planning for both employers and employees difficult, the extension of furlough is a good thing. It will help employers to cope and plan for the future whist being able to retain some or all of their employees. It will help employees financially and not result in them becoming unemployed in an economy where job vacancies are thin on the ground.
I would advise all businesses and employers to, at the very least, familiarise themselves with furlough and its extension. Speaking to their advisers (accountants and solicitors) is strongly recommended and if anyone reading this article wants to speak about furlough or any employment issues then please do call or email me (01752 513549 / robert.zacal@GAsolicitors.com).