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FURLOUGH SCHEME UPDATE

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FURLOUGH SCHEME UPDATE

FURLOUGH SCHEME UPDATE

On 5 November, the Government announced its plans to extend the Coronavirus Job Retention Scheme (‘CJRS’) (which was due to end at the beginning of December 2020) to the end of March 2021. This announcement swiftly follows the implementation of a second lockdown, which is currently set to persist up until 2 December 2020.

The extension also introduces several new facets to the CJRS for the benefit of workers and businesses over the winter months, in which, many would usually see a ‘Christmas rush’ constituting a fair proportion of their yearly returns.

The extended CJRS will operate as follows:

  1. The Government will pay up to 80% of furloughed employees’ wages for the hours they are no longer working. Employers will still be required make the equivalent National Insurance and employer pension contributions for the hours not worked by furloughed employees.
  1. The Government plans to review the CJRS extension in January 2021, to ascertain whether employers can be asked to contribute greater amounts to employees’ salaries under the scheme in line with an improving economic climate.
  1. Employers can claim for employees who were employed and on its PAYE payroll on 30 October 2020 and the employees do not need to have been furloughed previously. Likewise, an employer does not need to have previously claimed under the CJRS to make a claim under the extended CJRS.
  1. Employees who were made redundant or stopped working after 23 September 2020 can be re-employed and claimed for.
  1. “Flexible furlough” shall continue, allowing an employee to work part time for their employer, whilst being on furlough for the remaining hours they would typically work. Meaning, that the employer will be responsible for the employees’ salary for any period which the employee does works, whereas, hours not worked will be covered by the CJRS.
  1. A brief policy paper has been published outlining the changes, although further details and guidance on the CJRS extension will be provided on 10 November 2020. The paper states that to be eligible for the grant, employers must have confirmed in writing to their employee (or reached collective agreement with a trade union) that they have been furloughed. The employee does not have to provide a written response. It also sets out that where consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of an extended CJRS claim as long as it is made according to the conditions set out in that paper. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of an extended CJRS claim.
  1. Employers will be able to claim for the period from 1 November from 8.00 am on 11 November 2020.
  1. In light of the CJRS extension, the Job Retention Bonus (which was due to be paid in February) and the Job Support Scheme has now been put on hold.
  1. In addition, the size of the grant available under the Self-Employment Income Support Scheme (‘SEISS’) is to be increased. Previously, workers could receive a grant of up to 55% of their average profits. Now, self-employed workers can now apply for a grant of up to 80% of their average profits for the period of 1 November 2020 to 31 January 2021, subject to a maximum of £7,500.
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If your business needs legal support with any issues arising from COVID-19, please get in touch with Priya Magar

All information in this update is accurate at the time of writing. It is meant for general information only and is not legal advice.