Further extension of the Coronavirus Job Retention Scheme – The Chancellor’s Statement - UK

• United Kingdom

• Coronavirus - Workforce issues
• Employment law

06-11-2020

On 5 November the Chancellor, Rishi Sunak, made an unexpected announcement that the Coronavirus Job Retention Scheme (CJRS) which had only recently been extended to 2 December, will be further extended to 31 March 2021. The proposed launch of the Job Support Scheme has been postponed and the Job Retention Bonus will not be paid in February 2021 as planned. Instead, a “retention incentive will be deployed at the appropriate time”.

For claim periods running through to January 2021, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. However, the Government plans to review the policy in January to decide whether economic circumstances are by then improving enough to ask employers to contribute more.

A policy paper summarising these changes has already been issued which applies to CJRS claims for periods starting on or after 1 November. It is stated that full guidance will be forthcoming on 10 November.

Key issues for employers to note from the policy paper

• although the initial extension of the CJRS to December had been linked to the imposition of restrictions in England, it is confirmed that the extended CJRS is available for employers across the UK which meet the eligibility criteria, whether their businesses are open or closed
• employers need not have accessed support from the CJRS previously and they can claim for employees who have not previously been furloughed, with the minimum claim period being 7 days
• unlike the proposed Job Support Scheme, there is no distinction between employers on grounds of size or a financial impact test for large employers
• the initial announcement regarding extension of the CJRS stated that employees must have been on the payroll by 23:59 on 30 October 2020. However, employees who were on the payroll as at 23 September 2020 but, after that date, were made redundant, stopped working for their employer or whose fixed term contract expired, can now be re-employed and claimed for. (The employer must have made a PAYE Real Time Information (RTI) submission to HMRC from 20 March to 23 September 2020, notifying a payment of earnings for the employee). However, there is no obligation on an employer to re-employ such employees
• employer contributions until January will be the same as they were in August 2020 so, for hours not worked by their employee, employers will need to cover only National Insurance and employer pension contributions. The relevant contractual terms will apply to hours worked
• those shielding (in line with public health guidance) and with caring responsibilities are eligible for furlough
• where employees were on an RTI submission on or before 19 March 2020, employers will be able to use the CJRS calculations which applied in August 2020 when determining their reference pay and usual hours for CJRS purposes
• where an employer is claiming under the CJRS for the first time, or where any employer is claiming for employees they hired between 20 March and 30 October 2020, the CJRS methodology will update the reference pay and usual hours to take account of the period covered by the extension:
  • for employees on fixed pay, the last pay period prior to 30 October 2020 provides the basis for calculation
  • for employees with variable pay or hours, the average of the tax year 2020 to 2021 up to the start of the furlough provides the basis for calculation
• claims must be made for each calendar month. Employers will be able to claim from 8am on Wednesday 11 November 2020, reflecting claims in advance and in arrears for the period from 1 November. Payments are anticipated to be made 6 working days after initial claims
• claims up to 31 October must be made by 30 November 2020
• claims relating to November must be submitted by 14 December 2020 and, for each subsequent month, by day 14 of the following month
• there is no minimum/maximum furlough period. However, claims for flexible (a mixture of worked and unworked time) or full furlough are possible with a minimum claim period of 7 consecutive calendar days
• as previously, to be eligible for a CJRS 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
• where an employer proposes to claim for the period commencing 1 November, note that 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. (It appears this deadline will not apply where an employer is seeking to claim for future periods).

Comment

The return of the furlough scheme in, essentially, its original form will be welcomed by employers managing the ongoing impact of the pandemic, in particular the effects of ‘Lockdown 2’ in England. It will also go a long way to alleviating many employees’ fears and concerns.

The confirmation that the grant support will be available until end of March 2021 will also be appreciated by employers as they plan for the likely tough winter ahead. Employers will note that a January review may require a greater contribution than the pension and employer National Insurance contribution needed until then. The announcement last weekend suggested that the extended CJRS would operate in arrears, potentially giving rise to cashflow concerns. It is now confirmed that the CJRS can be claimed in advance of that month’s wage costs.

Full guidance will include further detail on how to claim and will be published on 10 November 2020. We will produce a further briefing soon after that guidance is available.