Coronavirus Blog Series: Extension of the Furlough Scheme
Published 3 December 2020
The Coronavirus Job Extension Scheme (CJRS) has now been extended until 31 March 2021 across the United Kingdom. In this note you will find details of the changes that will apply from 1 November until the scheme closes at the end of March 2021.
The extended period of the CJRS will operate as it did in August 2020. In other words, the Government contribution will be 80% of wages up to a cap of £2,500. This is much more generous than how the scheme operated in October 2020.
As before, employers can choose to top up employee wages but does not have to do so. We would recommend that all employers provide employees with a furlough letter or agreement, detailing what will be paid to the employees during any period of furlough. This is something the Employment Team at MKB Law are happy to assist with.
The chancellor has said that the government contributions will be reviewed again in January 2021.
What about the other job bonus scheme?
As the CJRS scheme has been extended the chancellor’s bonus scheme, which was a bonus payable to employers of £1,000 per employee it retained until 31 January 2021, has now been postponed.
Flexible furlough continues to be an option for employers, meaning employees can work part-time and receive a furlough grant for their unworked hours. Unlike under the original scheme, there is no need for an employee to have been furloughed before in order to be put onto flexible furlough at this time.
Please remember, that employers will need to pay employees according to their contract of employment for any hours that they actually work, So if you had agreed to reduce pay to 80% while the employee was on furlough, you will likely be required to pay employees at 100% pay for any hours worked. This will of course depend on what has been agreed between the parties and the wording of the furlough agreement in place.
Is my company eligible to avail of the extended CJRS?
In terms of eligibility for the extended scheme, neither the employer nor the employee needs to have previously used the CJRS.
The employer Guidance states that employers can furlough employees and apply for a grant “if you cannot maintain your workforce because your operations have been affected by COVID-19”.
All employers with a UK bank account and UK PAYE schemes can claim the from the Scheme, although as with the original CJRS, the Government expects that publicly funded organisations will not use the scheme.
The Guidance does not give any details on how a business would demonstrate they have been negatively impacted by Covid-19 nor does it confirm how HMRC will check that business has been negatively impacted. As such it would appear that HMRC are taking a broad approach to eligibility and that the wording above is included to discourage abuse of the system. It is however worth highlighting that there will be a public register of employers that utilise the scheme, which will note how much has been claimed.
Are my employees eligible?
The scheme is available in respect of employees, on any type of contract, who were on the employer’s PAYE payroll by 23:59 on 30 October 2020. This means that there may be employees who were not eligible for the original scheme, who are now eligible to be furloughed.
Can employees take holidays?
After much debate it was confirmed earlier this year that employees can take annual leave whilst they are furloughed. You will be able to claim via the CJRS for annual leave that is taken. Employers will need to pay employees according to their ‘normal pay’ for any days annual leave an employee takes, which will need to be at least the rate of pay they are contractually entitled to and any further amount due based on commission or over time.
Can I furlough sick or shielding staff?
Clinically extremely vulnerable employees are “advised” to work from home over the most recent period of lockdown. If the employee cannot work from home the Guidance says that such employees are now advised not to go to work for the period of the restrictions.
The CJRS Guidance says those who are clinically extremely vulnerable or at the highest risk of severe illness from Covid-19 can be furloughed.
However, the Guidance emphasises that it is not intended for short-term absences from work due to sickness or self-isolating.
Employees on maternity leave
If an employee decides to end their maternity leave early to enable them to be furloughed (with the employer’s agreement), they will need to give at least 8 weeks’ notice of their return to work and the employer will not be able to furlough them until the end of the 8 weeks. If an employee is getting Maternity Allowance while they’re on maternity leave, they should not get furlough pay at the same time.
If I have already made staff redundant, can I re-hire them?
If you made employees redundant, or they stopped working for you on or after 23 September 2020 you can re-employ them and put them on furlough. This applies as long as the employee was employed and on PAYE payroll on or before 23 September 2020.
Unfortunately I will need to let staff go; can I use the furlough scheme during employee’s notice period?
For claim periods starting on or after 1 December 2020, employers cannot claim for any days during which a furloughed employee is serving a contractual or statutory notice period.
When do I claim?
Although the process for making a CJRS claim is the same as it was previously, there is a shorter window in which to make your claim. For example, claims relating to November 2020 will have to be made by 14 December 2020, with claims relating to each subsequent month being submitted by day 14 of the following month.
I need help!
Having provided key advice to clients throughout the pandemic on the CJRS and other issues, the Employment Team at MKB are excellently placed to provide guidance and assistance on the operation of the CJRS and steps your business are taking in relation to the scheme.
If you require further advice on this or any other employment matter, please contact the Employment Law team at MKB Law.
This article is for general guidance only and should not be regarded as a substitute for professional legal advice.