Extension of Furlough Scheme

A week is a long time not just in politics, but with respect to anything related to the COVID pandemic.  One week, local tiered restrictions, next week national lockdown #2.  One week, definitely no extension to the furlough scheme, next week extension until 31 March 2021.

So the Job Support Scheme (JSS) is on the backburner for the time being and the Job Retention Bonus is on hold with no payment being made in February 2021.  Welcome back Coronavirus Job Retention Scheme (CJRS), although we can’t really say that it’s as though you never left as many employers made decisions to make staff redundant on the basis that you were leaving.  You’ve also turned back time and look just the same as you did in August 2020 with no employer contribution other than NICs and pension contributions for at least three months. 

The refreshed furlough scheme rules for the period to 31 January 2021 will be fleshed out in detailed guidance on 10 November 2020 and a further Treasury Direction is bound to follow too.  In the meantime, the Government has issued another policy paper which confirms that:

“For claim periods running to January 2021, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The £2,500 cap is proportional to the hours not worked. The government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.”

This time round, eligible employees will need to have been on the employer’s payroll (with a PAYE RTI submission having been made for them) by 30 October 2020, whether or not they had been furloughed previously.  The availability of flexible furlough will continue, so furlough will not be an all-or-nothing arrangement as it was at the start of national lockdown #1.

Separate Government advice is that those who are clinically extremely vulnerable should again stay at home.  Employees who are shielding (or staying at home to support someone who is shielding) may be furloughed, as may those who have caring responsibilities.

The Government will also permit employers to re-employ (should they wish to do so) and furlough those staff “who were made redundant or stopped working for their employer” (so not just limited to redundancy) after 23 September 2020, provided that they were employed and on the payroll (with a PAYE RTI submission having been made for them) by that date.

Other aspects of the flexible furlough scheme continue, including the need to confirm the furlough arrangement in writing, to keep the agreement for five years and to keep records of hours worked (which may change from week to week) for six years.  Many employers had entered into JSS arrangements with staff for the period from 1 November 2020 which will need to be revisited in light of the lockdown.  To avoid any gap in cover, the Government has confirmed that:

“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.”

Therefore, it is necessary for employers to act quickly by 13 November 2020 to agree furlough terms with staff and put them into writing.  You must also ensure that you submit your claims under the CJRS by 30 November 2020 for the period 31 October 2020.  Claims under the extended scheme will be able to be made from 11 November 2020 and must always be made thereafter by the 14th day of the month following the month being claimed for (so by 14 December 2020 for November 2020)

There are now new decisions to be made and steps to be taken.  Organisations should not make the assumption that everything will go back to … “normal” (whatever that may be) when the current lockdown ends on 2 December 2020.  Many commentators expect a return to significant local restrictions in the absence of a wholesale extension to the national lockdown.  The extension of the furlough scheme for five months is good evidence of the Government’s potential intentions in that regard and the need for employers not be left wondering what financial support will be available at the end of the current period of lockdown.

As always, please contact one of the team at Synchrony Law for advice and guidance on any employment issue.

5 November 2020