The Furlough Scheme Extension and Employment Law

Insights - 16/11/2020

The Government has announced a further extension to the Coronavirus Job Retention Scheme (CJRS) which is now set to last until 31st March 2021.

The CJRS, known by most as the furlough scheme, was due to end on 31st October 2020 but following a last minute decision this date was pushed back to 2nd December. This latest extension means that some employees will have been out of the workplace on furlough for up to a year.

The move signals a step back from new initiatives like the Job Support Scheme (JSS) designed to re-mobilise the workforce and take away some of the Government’s financial burden. Below, we consider the implications this latest development will have on businesses and staff alike.

When does the furlough extension start and end?

1st November 2020 until 31st March 2021, with a review of the scale of the Government’s financial contribution expected in January 2021.

Do employees need to have been on the previous furlough scheme to qualify?

No, employees do not need to have been furloughed previously. Formerly, the scheme excluded new entrants from July 2020 with only a limited few exceptions to cover those coming back from family-related leave or TUPE. This latest development means that those who fulfil the eligibility criteria can apply for the scheme. Significantly, the newly extended scheme has also removed the previous restriction on the number of employees whom an employer could put on Furlough.

Has the process changed?

The process remains the same, but there is now a shorter claim window – so claims relating to November 2020 will have to be made by 14th December 2020, with claims relating to each subsequent month being submitted by day 14 of the following month.

How much will employees be paid under the scheme?

As before, the UK Government will pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month. This takes the scheme back to the rate it was at in August, before greater employer contributions were required in September and October. The level of Government contribution will however be subject to a further review in January 2021.

Do arrangements need to be in writing?

Employers should discuss furlough arrangements with their staff and must have confirmed to their employees in writing that they have been furloughed or flexibly furloughed. No written response is required by employees.

What happens to staff that were made redundant?

Staff who were on the payroll on 23rd September 2020 but who had subsequently been made redundant can be re-employed and put on the furlough scheme. It’s important to note that an employer is not under an obligation to place individuals on furlough instead of making their role redundant. It is ultimately the employer’s decision, although it is appropriate to consider furlough as an alternative.

Employers will also need to consider the additional cost of NICS and pensions contributions as they remain liable to pay these sums. We recommend employers take advice if they find themselves in this situation.

What about employees who are shielding or sick?

Clinically extremely vulnerable people (those shielding in line with public health guidance or who need to stay at home with someone who is shielding) are advised to work from home where they can over the period of lockdown. If they are unable to work from home, the Guidance says that they are not to work for the period of the new restrictions (until we are out of lockdown, which is likely to be 2nd December 2020 at the earliest).

The Guidance confirms that it is possible to furlough people in this group, although there is no obligation to do so. Furlough is not intended to cover short term sickness absences, but for employees on long-term sick leave along with those shielding, it is up to employers to decide whether to furlough such employees. If an employee becomes sick while furloughed, the employer can choose to move that employee on to Statutory Sick Pay (SSP) or keep them on furlough, at their furloughed rate.

What about flexi-furlough?

Employers continue to have the flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time. For worked hours, employers must pay employees according to their employment contract and will be responsible for paying the tax and NICs due on those amounts.

What about the Job Support Scheme?

The Job Support Scheme (JSS), which was due to start on 1st November 2020, will now be replaced with the extended furlough scheme. There is currently no fixed date for its return. Any businesses that have put together JSS agreements in advance of the scheme’s launch should speak to any affected employees and ask them to agree to some or all of their time being furloughed instead.

Employees transferred under Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

The guidance clarifies that TUPE’d employers are eligible to claim in respect of the employees of a previous business transferred if the TUPE or PAYE business succession rules apply and the employees being claimed for have previously had a claim submitted for them by their prior employer, and if they:

  • Transferred from their old employer to their new employer on or after 1st September 2020
  • Were employed by either their old employer or new employer on 30th October 2020
  • Are on a PAYE Real Time Information (RTI) submission to HMRC, by their old or new employer between 20th March 2020 and 30th October 2020, notifying a payment of earnings for that employee

Can Employers claim under the scheme if employees are dismissed but put on furlough for the notice period?

In a further update to the Guidance issued on 13th November, the Government announced that claims could not be made under the scheme in these circumstances for periods commencing 1st December 2020.

For further information about how the extension to furlough affects you or your business, please go to GOV.UK, or contact a member of our personal employment law or business employment law teams for specialist advice.

Disclaimer:

Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.