In his Spring 2021 Budget, the Chancellor announced that the Coronavirus Job Retention Scheme (CJRS) will be extended for a further five months from May until the end of September 2021.
Chancellor Rishi Sunak said the scheme – which pays 80% of employees’ wages for the hours they cannot work in the pandemic – would help millions through “the challenging months ahead”.
Key Highlights Announced by the Chancellor
Employees will continue to receive 80% of their current salary for hours not worked.
There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June.
From July, the government will introduce an employer contribution towards the cost of unworked hours. This will be 10% in July and 20% in August and September.
For periods ending on or before 30 April 2021, employers can claim for employees if they were employed on or before 30 October 2020, as long as they have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020. This may differ if employees were made redundant, or they stopped working for the employer on or after 23 September 2020 and were then re-employed by the employer.
For periods on or after 1 May 2021, employers can claim for employees if they were employed on 2 March 2021, as long as they have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021.
Do employers need to enter into fresh furlough agreements with employees from 1 May 2021?
As a result of the CJRS being extended to 30 September 2021, there will be several potential scenarios for Employers to consider, including:
An employee who was already furloughed before 30 April 2021 under an agreement without an end date.
An employee who was not already furloughed under the CJRS.
An employee who was already furloughed before 30 April 2021 under an agreement without an end date
Where an employee was furloughed under a written furlough agreement entered into before 31 October 2020 which remains in force, it may be possible for the previous furlough arrangement to simply continue after that date.
The requirements of a valid furlough agreement under the fifth Treasury direction are the same as previously under the third Treasury direction (see paragraph 7.1, fifth Treasury direction) and at this time there is no requirement for the agreement to be entered into on or after 1 November 2020. The only requirement is that it is entered into before the period to which the claim relates (paragraph 7(c)(i)). Assuming the eligible employer and qualifying employee requirements continue to be met (which also remain substantially the same under the fifth Treasury direction, see paragraphs 4 and 6), it may be possible for furlough to continue under a previous furlough agreement.
However, it is likely that some amendment will be required to most furlough agreements in order for the arrangement to continue after 30 April 2021.
An employee who was not already furloughed under the CJRS
As the employee was not furloughed previously, the employer should enter into a detailed furlough agreement with the employee and the employee should be asked to sign and return the agreement to confirm their agreement to be furloughed in accordance with the terms of the CJRS. This could be done electronically.
The agreement should be made before the CJRS period to which it relates starts.
What About Self-Employed Workers?
The Chancellor announced that the Self-Employment Income Support Scheme (SEISS) is also being extended with a fourth grant covering the period February to April 2021 and a fifth and final grant covering May to September 2021.
There will be temporary continuation of tax exemptions for COVID-19 tests and home office expenses, and of the Statutory Sick Pay (SSP) Rebate Scheme while sickness levels remain high.
On Friday 9 October 2020 the Scottish administration ordered the closure of pubs and restaurants across central Scotland and with the UK Government considering similar ‘local’ lockdown restrictions for many parts of England, the Chancellor announced the extension of the new Job Support Scheme (JSS).
The extension of the JSS is intended to provide temporary support to businesses whose premises have been legally required to close as a direct result of coronavirus restrictions and will see affected businesses receiving grants towards the wages of employees who have been instructed to and cease work. The UK government will now pay two thirds of employees’ usual wages, up to a maximum of £2,100 per month and employers will not be required to contribute towards wages, but will need to cover employer National Insurance and pension contributions.
The announcement of an extension to the JSS comes hot on the heels of the new Scheme being introduced by the Chancellor just two weeks earlier and will undoubtedly be welcomed by many employers, but the end of the CJRS (furlough scheme) will still leave many employers unsure about their future and that of their employees.
We have updated our FREE COVID-19 Guidance for Employers and collated a comprehensive FAQs document to help employers understand the key elements of the new JSS to assist them in planning what to do when the furlough scheme comes to an end on 31 October 2020.
Check out our summary of the new JSS here and to get answers to many of the frequently asked questions about the Job Support Scheme (JSS).
Support for Employers
The COVID-19 lockdown restrictions and various government schemes being introduced by the UK government continue to present numerous and complex challenges for Employers.
If you are an Employer and require advice and support on any employment matters, COVID related or otherwise, call us now on 0800 612 4772 or Contact us via our website and we will set assist you to navigate through the employment law minefield created by the COVID-19 crisis and comply with your legal obligations.
Overnight the government has published further details of the Furlough Scheme in what we presume is an attempt to address the increasing number of queries the previously published guidance left unanswered.
On Thursday 26 March 2020 we broke the news that the government would be publishing further details on the Coronavirus Job Retention Scheme, aka the Furlough Scheme, which they duly did on Friday 27 March 2020.
This latest update does go some way to providing much more clarity for Employers, but many areas remain unclear: What do ‘statutory duties’ actually cover for company directors? Are employees who TUPE into a business after 28 February covered? Can employees take annual leave when on furlough, and what should they be paid?
We hope there is further clarity provided in the coming days but in the meantime, here are the latest updates provided overnight:
CLARIFIED: employeescan start a new job when on furlough (meaning they might end up earning 80% of the old salary and 100% of a new one). This was not prohibited in the earlier guidance, but the new guidance expressly allows it. The guidance does say it has to be allowed under the old employment contract, but presumably the old employer can waive that.
CLARIFIED: an employer can reclaim 80% of compulsory (presumably meaning contractual) commission back from HMRC, as well as basic salary. This is good news for car salesmen and estate agents. But it can only be referring to the commission from past sales as the furloughed employees cannot be completing new sales when on furlough.
CHANGED: employers can reclaim 80% of fees (whatever that means) from HMRC. The previous guidance said they could not.
CLARIFIED: the 80% does not include non-monetary benefits (eg the value of health insurance or a car).
CLARIFIED (although we all knew this anyway): Company directors can be furloughed. They can still perform their statutory duties, but not other work for the company.
CONFIRMED: Employees can be furloughed multiple times, ie they can be furloughed, brought back to work, then re-furloughed (subject to each furlough period being at least three weeks)
NEW: Employers must notify employees of their furlough status in writing (the previous guidance did not require it be in writing) and keep the record of that written notification for five years.
Once we have more information, we’ll update our website so bookmark our site and keep checking for updates.
Support for Employers
If you are an employer affected by any of the issues being created by the outbreak of Coronavirus and require further assistance and support, call us now on 0800 612 4772 or Contact us via our website.
Yesterday we outlined for you the “unofficial” position on how the Coronavirus Job Retention Scheme would work and it looks like our sources were spot on!
Key Points of the Coronavirus Job Retention Scheme
The government have now published further details of the Coronavirus Job Retention Scheme (otherwise known as the Furlough Scheme) and we have outlined below the key points published on their website, some of which had not previously been announced:
the scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020
any organisation with employees can apply, including charities, recruitment agencies and public authorities; however, the government does not expect public sector employers to use it as long as central government continues funding wage costs in the normal way. With agency employees, the scheme is only available for agency employees who are not working.
employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer NICs and minimum autoenrollment pension contributions on that wage. Fees, commissions and bonuses are not included.
an employer can choose to top up to 100%, but does not have to (subject to employment law and renegotiating any contractual entitlements)
for employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (eg earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year
individuals are only entitled to the minimum wage for the hours they work. So, if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However, they are entitled to be paid NMW for any time spent training.
to be eligible, the employee must have been on the payroll on 28 February 2020. If they were hired later, they are not eligible. Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put on the scheme
furlough leave must be taken in minimum blocks of three weeks to be eligible for funding
there is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks
the employee must not be working at all. If they work for even an hour (presumably during their entire three-week furlough period), they are not eligible. However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
when agreeing changes in hours (and acceptance of 80% pay), assuming the contract does not already allow for that, normal employment law applies. The employer must be careful not to discriminate in deciding who to offer furlough too. Prioritising vulnerable workers is unlikely to be discrimination, as prioritising the over 70s (direct age discrimination against those under 70) is almost certainly justifiable, and those who do not suffer from serious health conditions are not a protected class.
employees on sick pay or self-isolating cannot be furloughed but can be furloughed afterwards. Employees who are shielding can be placed on furlough.
employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed or electing to change to shared parental leave and then being furloughed.
employers can only claim once every three weeks, ie they cannot get weekly reimbursement. Claims can be backdated to 1 March 2020.
The government will issue further guidance on the mechanics of claiming the payment in due course. It says it expects the scheme will be up and running by the end of April. In the meantime, read the full guidance here.