Despite the Government insisting, at every opportunity, that Furlough Leave and the Coronavirus Job Retention Scheme (“CJRS”) would NOT be extended past 31 October 2020, and instead would be replaced by the Job Support Scheme (“JSS”), this was – as many of you will now know – not to be.
Leaving it until the last possible moment, the Chancellor confirmed, as part of further lockdown measures, that the CJRS would be extended, and for now the JSS has been put on hold.
More recent announcements that have been made as a result of increasing concerns relating to the Covid-19 pandemic confirmed that the CJRS will be here to stay until 30 April 2021. In addition, it has also been confirmed that (contrary to initial indications that the contributions would reduce over time) the Government contribution (80% of an employee’s salary (up to £2,500 per month) with the employer being required to pay employer NI and pension contributions) will not be reviewed, but will remain at this level for the duration of the CJRS.
As more and more businesses are impacted by Covid-19, in particular for those that are, once more, required to close their doors for a third national lockdown, use of the CJRS is on the rise. We have set out below some of the key considerations for businesses seeking to understand the application of Furlough Leave in 2021, and how it might be used to provide support during these difficult times.
What has stayed the same?
Many of the core features of Furlough Leave pre-31 October 2020 remain. Such features include the requirement that an employee does not carry out any work whilst furloughed, and that the employee will continue to accrue all other benefits and entitlements apart from full pay. You must also confirm the furlough arrangements in writing, and keep these written records for at least 5 years.
The concept of Flexible Furlough Leave – where employees can be asked to carry out part-time work and paid at full pay as normal for such work, while being furloughed in respect of any hours not worked – also remains. For the hours an employee spends not working then you can recover a pro-rata amount (up to the maximums set out above, pro rata) under the CJRS. The method of calculating such amounts is by no means easy, and so we would suggest you contact your payroll provider in the first instance, or seek our assistance if you need further information.
What has changed?
The starting point for eligibility for the current CJRS is that an employee must have been on your PAYE payroll on or before 30 October 2020 (and an RTI submission to HMRC made in respect of that employee on or before 30 October 2020). Significantly, an employee does not need to have been previously furloughed to be placed on Furlough Leave, nor does your business need to have accessed the CJRS grants before.
There have, however, been some subtle changes to the rules relating to the use of Furlough Leave, which many employers may not be aware of. Importantly, whilst the CJRS pre-31 October 2020 was available to any business “affected by Covid-19”, the current rules have shifted this emphasis slightly, confirming that from an operational perspective, only employees “whose employment activities have been adversely affected by the coronavirus or the measures taken to prevent or limit its further transmission” can be placed on Furlough Leave.
The changes to the application of the CJRS do not stop there. Previously employers had been able to utilise Furlough Leave even if an employee was working out a period of notice. The new incarnation of the CJRS provides that an employer CANNOT claim for an employee’s notice period post-1 December 2020.
There are much stricter time limits in place for the purposes of submitting your CJRS claim each month too. Since 1 November 2020, claims for reimbursement must be brought within 14 days of the end of each month. This does not give employers much time to get their paperwork prepared.
It is also worth bearing in mind that from February 2021 HMRC will be publishing a list of those employers utilising the CJRS on its website, together with an indication of the value of the claim within a banded range, so this will be a matter of public record.
Health and childcare reasons
Despite this apparent narrowing of the CJRS, Furlough Leave can still be used for those “clinically extremely vulnerable” employees who cannot attend work because they have been instructed to shield – a relief for both employers and employees in this situation.
In addition, following an amendment to the Government guidance on the CJRS on 4 January 2021 in response to national school closures, it has been confirmed that Furlough Leave and Flexible Furlough Leave can also still be used where an employee has caring responsibilities, to include where an employee is caring for children who are at home as a result of school and childcare facilities closing.
What the future holds?
As things stand, the CJRS will end on 30 April 2021. Given the previous extensions, and the current lockdown measures, it may be that the situation changes again. Alternatively, we may see the JSS finally come into effect. Watch this space!
Note: The content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any particular circumstance. If you would like more information on the content of this article, please call the Employmentor Team on 01603 281139.
