Extension of the Furlough Scheme update

Furlough extended

As we wrote in our post on 22 October 2020, the Coronavirus Job Retention Scheme (“CJRS”), known as the furlough scheme, was due to end on 31 October 2020.  Its replacement – the Job Retention Scheme (“JSS”) – was due to come into effect on 1 November 2020.  However, on the day it was due to close, the UK Government announced that the furlough scheme would be extended.  The objective of the extension being to provide support to businesses and employees during the new national lockdown which began on 5 November 2020. The furlough scheme therefore remains available to businesses and is currently set to be open until December.

Level of support and other key points under extended furlough

The level of support available under the extended scheme mirrors that available under the CJRS in August, with the Government paying 80% of wages up to a cap of £2,500.  Employers must continue to pay employer National Insurance Contributions and pension contributions (which, for the average claim, amounts to 5% of total employment costs),  In addition, employers are still able to top up employee wages at their own expense if they wish.

It is worth noting that flexible furloughing is now allowed under the extended CJRS, as well as full-time furloughing,.  Employers therefore have greater freedom to make the CJRS work for their business needs during lockdown.  Employers need not have used the CJRS before now, and the scheme is open to all employers with a PAYE scheme and a UK bank account.  To be eligible for being furloughed under the extended furlough scheme, employees must have been on their employer’s PAYE payroll by 23:59 on 30 October 2020.  The employer must also have made a real time information submission to HMRC on or before 30 October 2020 in relation to the relevant employee(s).

Further details on the extended CJRS are expected shortly, so do watch this space for further updates.  Given the unpredictable nature of COVID-19, we believe that that the extension will be a welcome move for businesses in England impacted by the pandemic, in particular, the ability for furloughed staff to work on a part time basis.

What does this mean for employers?

However, the extension of furlough may have come too late to stave off job losses in some sectors.  A number of organisations will have implemented redundancies already, given the planned ending of furlough and the proposed introduction of JSS (which offers more limited support and is somewhat more complex). The Office for National Statistics recently reported that the number of redundancies and rate of unemployment are increasing, with the latter reported at 4.5% for those aged 16 and over.

Where redundancies are seen as the only solution, employers will clearly need to bear in mind their legal obligations, but should also take note of the principles set out in the joint statement from ACAS, CBI and TUC, in particular, with a view to conducting redundancy processes “openly; thoroughly; genuinely; fairly; and with dignity” [https://www.acas.org.uk/joint-statement-acas-cbi-tuc].  As businesses and employees look towards a potentially bleak winter it is important to remember there are alternatives to redundancies, including the use of the CJRS and, eventually, the JSS.  Employers may also want to consider other cost-saving measures available to them, such as changes to working patterns, and even pay.  In the current climate, being open and frank with employees about the challenges ahead and seeking their views could help in finding a way forward.

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