Coronavirus Job Retention Scheme – Update

Yesterday the Chancellor, Rishi Sunak, announced that there will be a five month extension to the Coronavirus Job Retention Scheme (“CJRS”). This is to support individuals and businesses who continue to be impacted by the COVID-19 pandemic over the winter.

The CRJS rules will mostly remain the same with a few minor changes. Up until the 31 January 2021 employees will be able to receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month (with the cap being proportionate to the hours not worked). The Government will then review the situation in January 2021 to decide whether the economic situation has improved enough to ask employers to increase their contribution.

Full guidance is expected to be published on 10 November 2020, but we set out some of the points which have been confirmed so far in the Government’s policy paper:

  • Employers do not need to have used the CJRS before to be able to claim under it, and it does not only apply to employees who have been previously furloughed.
  • Employers can claim whether their organisations are open or closed.
  • Employers can claim in respect of employees who were employed and on their payroll on 30 October 2020 (meaning an employer mist have made a PAYE Real Time Information (“RTI”) submission to HMRC between 20 March and 30 October 2020, notifying a payment of earnings for them.
  • Employees can continue to be furloughed on a full or part time basis.
  • Employer contributions will be the same as in August 2020, meaning that employers will only be asked to cover National Insurance and employer pension contributions.
  • If employees have previously been furloughed, employers will need to use the same calculations for calculating reference pay and usual hours as they have under the CJRS so far.
  • If employees are being placed on furlough leave for the first time (from 1 November 2020 onwards), employers must use a different pay reference period. In brief, for employees working fixed hours this will be 80% of the wages payable in the last pay period ending on or before 30 October 2020. For those with variable hours, this will be 80% of their average pay between the start date of their employment or 6 April 2020 (which is later) and the day before their CJRS extension period begins.
  • It is open to employers to place employees on furlough leave when they are unable to work because they are shielding in line with public health guidance, need to stay at home with someone who is shielding or have caring responsibilities resulting from the COVID-19 pandemic (including childcare).
  • Employees who were employed and on an employer’s payroll on 23 September 2020 and were made redundant or stopped working for their employer afterwards can be re-employed and claimed for. This is subject to the employer having made a PAYE RTI submission to HMRC from 20 March to 23 September 2020, notifying a payment of earnings for those employees.
  • Employees must continue not do any work in respect of any hours where they are recorded as being on furlough leave. They can take part in training, volunteer for another employer or organisation and work for another employer if their contract permits this.
  • As has been the case so far under the CJRS, changes to employee’s contracts must be made by agreement and furlough arrangements confirmed in writing. The Government has confirmed that furlough or flexible furlough agreements made retrospectively which have effect from 1 November 2020 (and subject to these complying with employment law) will be valid for the purposes of the CJRS. It is important to note that only retrospective agreements put in place up to and including 13 November 2020 may be relied upon for the purposes of a CJRS claim.

The launch of the Job Support Scheme, which was going to commence on 1 November 2020 alongside the three-tier restriction system, has been postponed, together with the Job Retention Bonus which was originally due to be paid in February 2021. A new retention incentive scheme is to be deployed at a later date.

The Government’s full policy paper can be found here.

If you would like any assistance in preparing a furlough agreement, or have any questions in relation to this content or another employment law issue, please feel free to contact a member of the Employment Team.

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