On 5 November 2020, the Government announced that the Coronavirus Job Retention Scheme (CJRS) would be extended into next spring, with the scheme now ending on 31 March 2020. In the intervening weeks since the announcement, the Government has published updated guidance and a new Treasury Direction setting out the rules for this latest phase of the scheme.
We summarise the latest changes and consider their implications and consequences below.
Extension into the New Year
From 1 November until 31 January 20201 employers can furlough employees and claim 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. Employers must cover National Insurance and pension contributions. In January the scheme will be reviewed again, it may be that from 1 February 2021 the level of employer contributions will expand in a similar way to the scheme’s operation in the summer where employers were requested to fund an increasing percentage of employees’ wages.
The extended CJRS mainly follows the same provisions as set out under the flexible furlough scheme originally in place from 1 July 2020. This means that employers will still be able to furlough staff flexibly. Employees will continue to be able to perform some part-time work without the employer losing eligibility to receive support under the CJRS.
If employees work a proportion of their normal hours in a week they will receive their normal pay for that work (reflecting any temporary salary reductions that may apply), and then remain on furlough for the remaining proportion of their normal hours. During this unworked time the employer will be able to claim under the CJRS at the applicable rate. It continues to be the case that there is no minimum length of time that an employee must be furloughed, meaning that employees can be rotated on and off furlough over shorter reference periods if required.
From 1 November it has been possible to claim for employees provided they were employed on 30 October 2020. An employee who had been made redundant or stopped working after 23 September 2020 can also be re-employed and furloughed under the extended scheme. It is no longer a requirement that employees need to have been previously furloughed in order to be eligible. Equally, there is no longer a maximum number of employees that employers can make a claim for (previously it had been the case that employers could only claim for the number of employees they had claimed for prior to June).
As a result of the extension of the CJRS, the Job Retention Bonus, a payment of a £1,000 to employers payable for each employee who had previously been furloughed but who had been retained by the employer, is now withdrawn. This bonus was criticised by some quarters as rewarding businesses who had made use of the CJRS but who were not in financial difficulties and so were more likely to retain staff into 2021.
Get it in writing
If an employer wishes to furlough an employee, this must be agreed in writing with the employee and a record of this agreement must be kept by the employer for five years. We would recommend that this agreement is as detailed as possible – certainly covering the period of furlough and which of the employee’s normal hours will and will not be worked.
It is now a requirement that furlough agreements are in place before the start of the relevant claim period. It should be possible to amend current furlough agreements to reflect this new phase of the scheme, but it is important that this is done before the employee is furloughed under this new claim period. It is no longer possible to backdate agreements to furlough.
It has become increasingly clear from the guidance and Treasury Directions that the need for a written agreement between the employer and employee is key. While back in the spring at the introduction of the scheme many employees were furloughed without written agreement, it is essential that written furlough agreements are now put in place when furloughing staff.
Changes to notice
One of the most significant changes to the scheme is that from 1 December 2020 to 31 January 2021 it is not possible for a claim to be made for any day that an employee is serving notice. This covers both statutory and contractual notice periods. This means that employers will not be able to use the furlough scheme alongside a redundancy exercise once notice is given. Employers will also need to ensure that if an employee is on furlough and hands in their notice, they are taken off the furlough scheme and either return to work, are placed on garden leave or receive a payment in lieu of notice (as applicable). This change brings the CJRS in line with the rules under the now postponed Job Support Scheme. The Government’s view appears to be that the CJRS is designed to maintain employment, and so it runs contrary to the scheme’s purpose for the employer to receive money under the scheme when it has been confirmed that employment is going to end.
Perhaps in an attempt to make it less attractive for large and profitable companies to furlough staff unnecessarily, HRMC will, for claims made from 1 December onwards, publish information about CJRS claims on their website. This will include the employer’s name and a reasonable indication of the amount claimed. Employers can be excluded from this public list if they can show that publication would expose their workforce to serious risk of violence or intimidation, which appears to be a very high bar.
Claiming under the CJRS
The way that claims are made under the CJRS will continue unchanged from the system introduced on 1 July 2020 with all claims having to start and end in the same calendar month. Claims must run for a minimum of seven days – a reduction from the minimum of three weeks back in the spring. The Treasury Direction and guidance set out various examples of the often complex calculations an employer must carry out to establish the correct amount to claim. These calculations remain as originally set out back in the summer.
Overall, this latest phase of the CJRS operates in a similar way to the flexible furlough scheme introduced in the summer. The scheme’s extension reflects that while England may be under a national lockdown due to end on 2 December 2020, the Government anticipates that the economic repercussions will be longer lasting and that many businesses will need continued support over the winter in order to maintain their workforces. There are a couple of distinct but important changes to this phase of the scheme, that differentiate it from furlough in the spring and summer and that require employers to take positive action if making use of the scheme from 1 November onwards.
Please get in touch with any of the authors of this article, or your usual Fladgate contact, if it would be helpful to discuss these themes or others in the context of any issues that you might be facing.