Back to Blog

Coronavirus Job Retention Scheme and back to Furlough – what does it all mean for your business

In an unexpected development and as part of his announcement that there will be a new lockdown in England between 5 November and 2 December, the Prime Minister confirmed late on Saturday 31 October that the Coronavirus Job Retention Scheme (CJRS) will be extended until December rather than closed on 31 October as originally planned.

The new Job Support Scheme (JSS) essentially comprises two separate schemes, the JSS Open and JSS Closed.  These schemes were not set up to be mutually exclusive, although measures exist to prevent claims in respect of the same employees for the same days. The JSS was the government’s replacement wage support scheme, had been set to launch on 1 November, with the government publishing 11 detailed guidance notes on the evening of 30 October to help employers in administering the same. This scheme has now been postponed until the extended CJRS ends.

At the current time, we only have brief details on how the extended CJRS will work. Whilst the government has stated in its briefing note to MPs that additional guidance will be provided shortly in the form of ‘lockdown legislation’ and a Treasury Direction, many employers are going to need to take urgent and immediate decisions in relation to their workforces.

We summarise below the key aspects of the extended CJRS and answer some of the key questions employers are likely to have.

Key points:

  • The CJRS will now remain open until December and will not close, as originally planned, on 31 October. The exact end date is currently unknown but it is perhaps likely to coincide with the proposed ending of the new lockdown in England on 2 December. The government has confirmed that there will be no gap in eligibility for support between the previously announced end-date of the CJRS and this extension.
  • The introduction of the JSS (both the Open and Closed schemes) will be postponed ‘until the CJRS ends.’  Crucially, this keeps the door open for a further CJRS extension, which may happen if Westminster bow to pressure from the devolved nations.
  • The level of grant under the extended CJRS will mirror levels available to employers under the original CJRS in August. This means that the government will pay up to 80 per cent of an employee’s normal pay up to a cap of £2,500 and employers will be responsible only for National Insurance Contributions and pension contributions. As with the original CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
  • Given the previous scaling back of the CJRS (in October the government contribution was limited to 60 per cent of normal pay) and the acknowledged reduced level of support under both the JSS Open and Closed, the extended CJRS is more generous to employers, particularly those able to pivot quickly and communicate effectively with their staff in response to the last minute switch from the JSS.
  • Importantly, to access the extended scheme, neither the employer nor the employee needs to have previously used the CJRS. To be eligible, employees merely need to have an up to date furlough agreement in writing and have been on an employer’s PAYE payroll before midnight on 30 October (with a Real Time Information (RTI) submission notifying payment for that employee to HMRC having been made on or before 30 October). This is a significant change to the original CJRS, where the vast majority of employees had to have been furloughed for a period of at least 3 consecutive weeks ending on or before 30 June to enjoy continued access to the scheme through July to the end of October.
  • The extended scheme allows employers to rehire employees who have been made redundant and put them on furlough (as was the case in certain circumstances under the original CJRS). However there are moral, ethical and employment law implications to rehiring employees so employers considering this should give this careful thought and seek advice from Lexleyton.
  • Flexible furloughing will continue to be an option in addition to full-time furloughing so employees will be able to work some of their hours (and be paid for this by their employer) and receive furlough pay for unworked hours. Calculations determining usual hours and worked hours will broadly follow the same methodology as under the original CJRS.
  • The government expects that publicly funded organisations will not use the extended scheme, as was the case for the original CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements will continue to apply to these employers.
  • The extended CJRS will operate as the original CJRS did, with businesses being paid upfront (as opposed to in arrears under the JSS) to cover wage costs. The government has noted, however, that there will be a short period where the legal terms of the extended scheme are changed and systems updated in which businesses will be paid in arrears.

Points for employers to consider

  • Most businesses will have been planning workforce changes to dovetail with the original 31 October end date for the CJRS and the introduction of the JSS from 1 November. These plans will need to be revised given the extension of the CJRS and in most cases, urgent communications will be required with employees. The nature of this communication will vary depending on what plans and communications the employer had already put in place.
  • Employers with staff still on furlough and/ or flexible furlough may simply want to extend these existing furlough arrangements through until December. Many existing furlough agreements will be drafted to come to an end either on the expiry of the CJRS or on 31 October. Given previous issues under the original CJRS as to how to obtain and document employee agreement to CJRS terms, it would be sensible to get relevant employees to return signed letters indicating their agreement to an extension (or an appropriate collective agreement with any recognised trade union) or, at least, to respond by email confirming their agreement to remain on furlough until December on existing furlough terms. This will be easier if the extension to furlough is on the same terms as up to 31 October.  Any changes in furlough conditions must be agreed in writing.
  • Employers who have topped up pay throughout any previous furlough arrangements may want to extend furlough arrangements but may need to scale back or remove the top up. In this instance, employee consent to any such changes may be required, depending on the wording of the furlough agreement – in which case employers should seek the employee’s consent to the change urgently.
  • Some employers may have already put in place appropriate JSS (Open) temporary working agreements with their employees to commence on 1 November. In such cases, employers should now communicate with their employees about the extension of the CJRS (and that the JSS has been postponed) and, if appropriate, ask them to agree to be furloughed until December instead. Any such communication could confirm any flexible furlough arrangements that might be put in place (if there is some work you want the employees to perform) and point out that the arrangements will be more generous through November than they would have been under the JSS (subject to any top that you may have planned to offer under the JSS). As per the above, employers should seek, obtain and record employee agreement to this change (whether that be in writing, through collective agreement or by email).
  • There may be other cases where employees have not been on furlough and are not signed up to a JSS temporary working agreement. This might be, for example, where an employee was precluded from being furloughed between July to October as they had not been furloughed for 3 consecutive weeks by the end of June. If you are now considering furloughing any such employees up until December, it will be important to enter into the more detailed furlough agreement that you have used for other furloughed employees.

It’s not an easy time to own or operate a business. Managing people in times of crisis is a challenge which can be turned into opportunity. Book a free consultation with Lexleyton to find out how we can help.

Share this post

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Blog