5 November 2020
Breaking, and very unexpected, news today is the further, further extension of the furlough scheme which will now run until 31 March 2021.
Could this be because we are expecting to see a longer period of lockdown, maybe throughout the winter? Is it because the government does not want unemployment figures to be a record high on its watch? Is it mitigating the impact of a no-deal Brexit? Who knows, but I’ve set out below the things we need to know today.
We are expecting full guidance to be published on 10 November 2020.
- Up to January 2021, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. This is more generous than we have seen in September and October. The percentage may be reviewed for February and March.
- The government expects that publicly funded organisations will not use the scheme, as has already been the case for CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other previous CJRS eligibility requirements also apply to these employers. (This is a nice addition for some of our clients)
- Employees do not need to have been furloughed in the past
- Employees can work part-time or not at all (flexible furlough).
- Employees who have previously been furloughed continue to have their pay calculated on the basis of existing furlough calculations (as under the old scheme). Employees who have not previously been furloughed will have a different pay/hours reference period. Full guidance will be provided on 10 November, but broadly the pay is based on 80% of the wages payable in the last pay period ending on or before 30 October 2020 (for those on fixed wages), or 80% of the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins (for those on variable wages).
- Employees can be furloughed if they are shielding in line with public health guidance (or need to stay at home with someone who is shielding). (Employer can decide)
- Employees can be furloughed where they have caring responsibilities resulting from coronavirus, including employees that need to look after children. (Employer can decide)
- Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer after that date can be re-employed and claimed for. Take advice if you do this, you may need to issue a new contract and think about continuity of service.
- As before, employees who have been furloughed cannot carry out any work for their employer during the furloughed period but can have training, volunteer and work elsewhere.
- The Job Support Scheme and the Job Retention Bonus have been put on hold. The potential loss of the bonus will be a blow to many employers who have been holding out for this. This is what the policy paper says:
The launch of the Job Support Scheme has been postponed because of national developments related to the coronavirus pandemic. The Job Retention Bonus (JRB) will not be paid in February 2021 and a retention incentive will be deployed at the appropriate time. The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the CJRS is now being extended to 31 March 2021, the policy intent of the JRB no longer applies.
Do we have to use the extended furlough scheme?
Of course, the purpose of the scheme is to avoid job losses and it is a very welcome measure for many employees. From the business perspective, we still expect to see many redundancies as a furloughed employee will continue to accrue employment rights. These include holidays, statutory sick pay, maternity and parental pay and rights, the right not to be unfairly dismissed, and redundancy payments once they have worked for 2 years.
A business will have other overheads, not just staff costs. Mortgage and rent payments, business rates, regulatory fees, pension and NI costs to name a few.
If you think you will need to make redundancies anyway, you can use the furlough payments towards notice and holidays as the furloughed employee does not have to have a “viable” job. You may recall that the planned Job Support Scheme was all about viable jobs and it could not have been used for proposed redundancies. A long serving employee might have the right to 12 weeks’ notice so for many employers they will want to start the process now.
The policy paper with more details is here.