Furlough scheme extended

The government has announced that the Coronavirus Job Retention Scheme (CJRS), or 'furlough' scheme as it has become known, has been extended. It was due to close on 31 October 2020 and be replaced by the Job Support Scheme but this and the Job Retention Bonus have been axed. The latter was due to give employers who retained furloughed employees a one-off payment of £1,000 at the end of January 2021; but the new lockdown and bleaker economic outlook has resulted in the government keeping the furlough scheme open.

The furlough scheme will now run until the end of March 2021 with employees receiving 80% of their current salary for hours not worked.

There is currently no employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month. The CJRS extension will be reviewed in January 2021 to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.

Note the important provisions relating to employees that are re-employed. Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working afterwards can be re-employed and claimed for. The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.

This is a fast-moving area for employers and employees and specialist advice may be needed. Employers must ensure that they do not fall foul of the rules requiring employees who are on furlough to work. HMRC had started to investigate employers who had been reported for non-compliance with the regulations. Employees need to know their rights as some can be reinstated, even if they have been made redundant, subject to meeting the relevant criteria.

To discuss this or any other employment related matter, contact us.