Until 30 June 2021, the UK government will continue contributing 80% of an employee’s wages for furloughed employees, capped at £2,500, but from 1 July this contribution will reduce on a sliding scale until the scheme ends at the end of September.
For July, employers will only be able to claim 70% of wages for furloughed staff, up to a maximum of £2,187.50
For August and September, employers will only be able to claim 60% of wages for furloughed staff, up to a maximum of £1,875
This means that employers who intend to continue to rely on the furlough scheme will need to make up the difference between what they can claim and what they are required to pay furloughed employees (80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough) if they want to remain eligible for the CJRS grant.
With many employers still not able to fully reopen and many still struggling to generate revenue to cover existing operating cost, this additional uplift in costs may cause them to reconsider their position.
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.
We have collated here the key information relating to the recently extended CJRS (furlough scheme) that is intended as general guidance. If you require specific legal advice, please book your Free consultation call with one of our team of employment law specialists.
The Extended (CJRS) Furlough Scheme
With the introduction of new, tougher lockdown restrictions across the United Kingdom forcing many more business to close, many Employers will again be looking to take advantage of the Extended (CJRS) Furlough Scheme.
Below, we consider how the extended (CJRS) furlough scheme changed on 1 November and 1 December 2020.
How the (CJRS) Changed on 1 November and 1 December 2020
Since 1 November 2020, employers have been able to furlough employees on a flexible basis if they were on their PAYE payroll before midnight on 30 October 2020. The employer must have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for any employee being claimed for. Neither the employer nor the employee needs to have used the CJRS previously.
The level of support available under the extended scheme, which currently runs until 30 April 2021, will initially mirror that available under the CJRS in August, with the government paying 80% of wages for hours not worked up to a cap of £2,500 per month for claim periods running to 31 January 2021.
The grant and cap will be reduced in proportion to the hours not worked by an employee. Employers will need to cover employer NICs and employer pension contributions on all amounts paid to an employee (including those amounts covered by the CJRS grants). They will also need to continue to pay an employee for hours worked in the normal way. As previously under the CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
The government will review the operation of the CJRS in January 2021, to determine whether the economic circumstances are such that employers should be asked to contribute more.
Since 1 December 2020, employees under notice are no longer eligible and from February 2021, HMRC will also start to publish information about employers who submit claims in December and January, in order to provide greater transparency and deter fraud.
The JSS has been postponed as a result of the extension of the CJRS. It is not currently known whether it will be introduced after the CJRS ends. The JRB was withdrawn by the fifth Treasury direction following the extension of the CJRS.
HMRC published updated guidance regarding the extended CJRS on 10 November 2020, and the fifth Treasury direction on 13 November 2020 (dated 12 November 2020). Guidance for claim periods from February 2021 onwards, as well as a further Treasury direction, have not yet been published.
Here we provide more detailed Guidance on the Extended (CJRS) Furlough Scheme.
Advice & Guidance for Employers & Employees
The COVID-19 lockdown restrictions continue to present numerous and complex challenges for Employers and Employees alike. If you are experiencing challenges and require specialists advice, book a free consultation with our team of employment law specialists.
On 17 December 2020, the Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) will be extended until 30 April 2021.
In what many may view as an indication that lockdown restrictions across the UK are likely to remain in place in one form or another until at the least spring 2021, Chancellor Rishi Sunak announced today that the Coronavirus Job Retention Scheme (CJRS) will be extended until 30 April 202.
In doing so, he also confirmed that the percentage the government pay will remain unchanged until the end of April 2021 meaning Employers will be able to claim 80% of employees’ wages, capped at £2,500 for hours not worked, but Employers will still pay the national insurance and employer pension contributions on employees’ furlough pay.
Support for Employers
The COVID-19 lockdown restrictions and extension to the furlough scheme 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.
Businesses across the Central Belt of Scotland are bracing themselves ahead of today’s announcement from the leader of the Scottish administration, Nicola Sturgeon, when it is anticipated she will confirm that large parts of the West of Scotland will be moved up to strict Level 4 COVID-19 restrictions, the highest tier of coronavirus restrictions possible.
What Does the Law Say About Level 4 Restrictions?
When considering what implications, if any, a move to strict Level 4 restrictions might have for Scottish businesses, we need to look to the current Coronavirus legislation. Originally the Health Protection (Coronavirus) (Restrictions) (Scotland) Regulations 2020 set out the legal requirement to restrict movement and/or close premises and businesses during the emergency period. This has since been revoked and replaced by The Health Protection (Coronavirus) (Restrictions and Requirements) (Local Levels) (Scotland) Regulations 2020, which sets out the new legislation in respect the tiers of restrictions now in place.
Which Businesses Will Be Forced to Shut?
If Ms Sturgeon does decide to impose tighter restrictions across the Central Belt, many businesses that have only just started to recover from the previous lockdown will be forced to shut again, just as they were preparing for a much-needed uplift in trade in the lead up to Christmas.
This includes all non-essential shops, restaurants, bars, businesses which provide close contact services such as gyms, hairdressers, barbers, beauty, nail, massage and complimentary therapies, as well as those responsible for providing holiday accommodation, whether in a hotel, hostel, bed and breakfast accommodation, holiday apartment, home, cottage or bungalow, campsite, caravan park or boarding house.
In short, a move to strict Level 4 restrictions should NOT impose any new restrictions that prevent non-essential offices from continuing to operate as they have been, require that staff work from home or prohibit staff from commuting to work.
The default position from the Scottish administration has always remained that non-essential offices should remain closed and that staff should work from home where possible, but there is nothing in the legislation (original or recent) that requires non-essential offices and/or manufactures to close OR which restricts the movement of people either within or between different tier areas in the same way that Part 3, Regulation 5 of the now revoked Health Protection (Coronavirus) (Restrictions) (Scotland) Regulations 2020 set out the restrictions on movement which, in the early phases of lockdown, meant people could not leave their homes unless they were a key worker, an essential worker or otherwise had a valid reason to.
However, Schedule 5 of the latest legislation, which sets out in detail the Level 4 restrictions lists which types of businesses are required to shut, makes no reference whatsoever to non-essential offices, therefore, provided you have undertaken the appropriate H&S risk assessment and introduced all necessary controls and measures to protect your staff, there is no requirement to shut non-essential offices.
What Guidance is Available for Employers?
There is sector specific guidance available on the official Scottish Administration website, but no specific guidance for non-essential offices and call centres. The official guidance states that all business workplaces that are not being specifically required to close should consider a set of key questions – and at all times work on this precautionary basis:
Is what you do essential or material to the effort against the virus or to the wellbeing of society?
Is your business able to open in accordance with the current position in the Scotland’s Route Map?
Are you able to demonstrate and give confidence to your workforce that you can consistently practice safe physical distancing and comply with ALL other standard health and safety requirements?
If your business is covered by the sector specific guidance, you should follow that. If not, you should keep checking and reviewing the risks to yourself, your employees, your suppliers and your customers.
What Issues Might Employers Face if Level 4 Restrictions Are Imposed?
Many of the issues facing employers as they stare down the barrel of further lockdown restrictions will be similar to those they faced when the impact of the COVID-19 pandemic started to impact on peoples’ lives and work back in March this year.
The immediate issue for employers of business workplaces that are not being specifically required to close is whether they should close voluntarily, in full or in part. The fact that the Furlough scheme has been extended to the end of March 2021 means this is a viable option and one that would enable them to retain staff for however long the stricter lockdown restrictions remain in place.
However, if closing the workplace isn’t an option, other issues employers may face include the following:
Staff either being or living with a “clinically extremely vulnerable’ or ‘clinically vulnerable’ person.
Childcare issues and staff claims they can’t return to work because children need to self-isolate.
Staff simply being extremely anxious about the risk posed by COVID-19 and frightened of a return to the office.
Staff expressing concerns relating to health & safety and what they perceive to be the employer’s failure to follow government guidance.
The appropriate approach employers should take will depend on the specific reasons set out by each employee, but employers will need to proceed with caution to avoid the risk of possible claims at the Employment Tribunal.
Support for Employers
The COVID-19 lockdown restrictions and extension to the furlough scheme continue to present numerous and complex challenges for Employers.
0800 612 4772
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.
On 13 November 2020, HM Treasury published its fourth Treasury Direction, which together with the previous Treasury Directions, form the legal framework for the CJRS (furlough scheme). We have updated our COVID-19 Guidance for Employers and provide a useful summary of the key differences.
We have updated our COVID-19 Guidance for Employers and provide a useful summary of the key differences between the pre-and-post extension that Employers should be aware of here: Coronavirus Support & Information.
Failing to ensure any previously issued furlough agreements meet the extended CJRS grant eligibility conditions could result in failed grant claims.
Here’s how to avoid making that simple mistake:
To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed or flexibly furloughed.
Employers must:
make sure that the agreement is consistent with employment, equality and discrimination laws.
keep a written record of the agreement for 5 years.
keep records of how many hours their employees work and the number of hours they are furloughed (for example, not working), for 6 years.
The employee does not have to provide a written response and employers do not need to place all their employees on furlough.
The terms of any agreement must:
reflect the hours the employee has actually worked or not worked over the period of the agreement.
allow the employer to satisfy the terms of CJRS so they can make a claim in relation to hours not worked.
To ensure your staff remain eligible for the extended furlough scheme grant funding, you must ensure any previously issued furlough agreements meet the aforementioned conditions. Provided they do so, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a CJRS claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a CJRS claim.
If you’re not sure if your previously issued flexible furlough agreements meet the necessary criteria please contact us and we will review any previously issued agreements for you and provide further guidance to you thereafter.
Full guidance is due to be published next week, on 10 November 2020 and claims can be made from 11 November 2020.
On 5 November 2020, the Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) will be extended until 31 March 2021 and it is more generous than the scheme running in September and October.
Until at least January 2021, Employers will be able to claim 80% of employees’ wages, capped at £2,500 for hours not worked. Employers must pay the national insurance and employer pension contributions on employees’ furlough pay. The percentage may be reviewed for February and March.
Full guidance is due to be published next week, on 10 November 2020 and claims can be made from 11 November 2020.
The Chancellor confirmed that the CJRS applies to the whole of the UK equally.
Employers do not need to have used the CJRS previously and can claim whether their business is open or closed.
Employees can be fully or flexibly furloughed.
Employees must have been on the employer’s payroll on 30 October 2020, but do not need to have been furloughed previously.
Employees who were made redundant or stopped working for their employer after 23 September 2020 can be re-employed and claimed for under the scheme.
Employers will be able to claim for the period from 1 November from 8.00 am on 11 November 2020.
Employees who have previously been furloughed continue to have their reference pay and hours based on the 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). That does not, of course, mean they have to be furloughed.
Eligibility for Extended Furlough Scheme
To be eligible for the grant, employers must have confirmed in writing to their employee (or reached collective agreement with a trade union) that they have been furloughed. The employee does not have to provide a written response. Also:
“Where consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a CJRS claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a CJRS claim.”
What About the Job Support & Job Retention Schemes?
It was also confirmed that the Job Support Scheme has been “postponed”. It is not known whether it will be introduced after the CJRS ends.
The Job Retention Bonus has been deferred and a new retention incentive scheme will be deployed at a later date. A third grant for the self-employed will be available covering November to January of 80% of average trading profits up to a maximum of £7,500.
The UK Government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.
Support for Employers
The COVID-19 lockdown restrictions and extension to the furlough scheme 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.
In light of the PM’s announcement on 30 October 2020, in which he confirmed the Coronavirus Job Retention Scheme (Furlough Scheme / CJRS) will be extended to 2 December 2020, the new Job Support Scheme (JSS) will now not start until the extended Furlough Scheme ends.
The extension of the Furlough Scheme may create some confusion and concern for Employers who have already formally ended furlough and have implemented a formal short time working arrangement with employees. For guidance on this point, Employers can look to the third Treasury direction, in which the Treasury confirmed the requirement to reach agreement on flexible furlough arrangements needs to be confirmed in writing by employers (which may be in electronic form such as an email).
A literal interpretation of the Treasury direction would suggest that any formal agreement reached on short time working would mean employees returning to work under these arrangements would be eligible for the extended CJRS as being flexibly furloughed, but at the date of writing this we are still awaiting further guidance from the Treasury to determine what steps, if any, Employers will need to take with those employees they have entered into short time working arrangements with.
What the Treasury has confirmed so far is that the CJRS has been extended until December and will operate as the previous scheme did and the level of the grant will mirror levels available under the CJRS in August; so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work and that flexible furloughing will be allowed in addition to full time furloughing.
In addition, the Treasury has set out revised eligibility criteria and details of the support being provided:
Employers
All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.
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 eligibility requirements apply to these employers.
Employees
To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
*As under the current CJRS rules:
Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.
Employers can claim the grant for the hours 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 as currently under the CJRS.
When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
What support is being provided and employer costs:
For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.
Employers will pay employer NICs and pension contributions and should continue to pay the employee for hours worked in the normal way.
As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.
Within hours of the Prime Minister announcing new national lockdown restrictions for England, the UK Treasury has confirmed that the extension of the Furlough Scheme will apply across the whole of the UK, not just in England.
Employers would be forgiven for wondering why the Prime Minister couldn’t have made this clear during his initial announcement, but will be grateful HMRC have at least moved quickly to provide clarity.
Employers will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time, and will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs, so the cost for employers of retaining workers will be reduced compared to the current scheme, which ends today. .
The Job Support Scheme, which was scheduled to come in on Sunday 1st November, has been postponed until the furlough scheme ends.
Many Employers will have already taken steps to end furlough for employees from next week and may have either told them to return to work under their normal contracted hours, or agreed a short-time working arrangement.
The decision to extend the Furlough Scheme shouldn’t effect any arrangements already reached with employees, but does mean the mechanism for reclaiming costs will remain the CJRS portal.
Employers unsure about how this extension to the Furlough Scheme might impact the arrangements they have made with employees should take advice to ensure they remain complaint with the Terms of the Furlough Scheme and associated employment legislation.
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