Furlough Update – Coronavirus Job Retention Scheme (CJRS)
Update 5 November 2020
The government has announced an extension of the Furlough (CJRS) scheme that is to be active from 1 November 2020 until 31 March 2021. Initially the amount that employers can claim up to January 2021 is 80% of the wages of employees for hours not worked. A review will be carried out in January of the extent to which such support is still needed, and therefore the amount that government will contribute and potentially an amount that employers will have to pay for hours not worked.
Criteria for making a claim remain much the same as under the original furlough scheme. In particular, employees must do no work for the hours they are furloughed, or in the case of employees fully furloughed, they must do no work at all. Training and voluntary work for third parties is allowed, but no productive work that generates economic activity for the employer is allowed.
Critically, the ability to claim for support under this extended scheme does not rely on the employer having made a claim and to have furloughed employees prior to July 2020, which was a feature of the scheme that existed up to October 2020.
There are issues with furloughing company directors, and these are laid out in a separate article.
Until January 2021:
- The employer will be required to pay only employer National Insurance and pension contributions, without any contribution to pay.
- The employee must receive 80% of pay for hours not worked.
- There is a calculation to be done such that the claim amount for the employer is to be based on ‘usual hours’ (that are based on contracted hours prior to March 2020) less actual hours worked and this can lead to some unexpected consequences, often reducing the claim amount slightly from the actual amount the employer has to pay to the employee.
Unsurprisingly, because this scheme will now run into 2021, the Job Retention Bonus that had been set to be paid to employers at a rate of £1,000 for each employee, who was still kept in work up to the end of January 2021, has been scrapped.
Similarly, unsurprisingly, the Job Support Scheme, that had been set to commence on 1 November has been shelved.