Legal Issues – Furlough Extended

Recognising the very serious situation the United Kingdom is facing, our Prime Minister broke with tradition and unexpectedly over the weekend announced a dramatic change to the support mechanisms open to employers trying to cope with the ongoing challenges of Covid.

As part of the lockdown announced on Saturday afternoon and which is to come into force across England this week, the Job Support Scheme that was due to start yesterday (1 November 2020) is now suspended.  Instead, the Job Retention Scheme (CJRS), with which we have all become so familiar and which was due to end on Saturday (31 October 2020), will continue for another month.  At least. Being any more certain beyond that is impossible based on recent events.

Leaving aside the political arguments from this change that have already kicked off, looking purely at the economics this is good news for employers and for any employees who were at risk of redundancy once the current scheme ended.  An announcement of this extension at an earlier stage would certainly have been more helpful to employers trying to plan for the future but that has not happened and we need to deal with what this latest twist actually means.

Reflecting the rapid change of position, details of how this will work are in short supply but we know that CJRS will remain open until December, with employees receiving 80% of their current salary for hours not worked, up to a maximum of £2,500. Ironically, due to the scaling back of CJRS during August, September and October, the cost for employers of retaining workers will actually now be reduced and the extension is more generous and reverts back to July 2020 levels.

All employers, regardless of size or status, are eligible and furlough can be full time or flexible.  National insurance and employer pension contributions are still payable by employers.

On a very practical level, additional guidance will be set out “shortly” but that is as much as anyone knows for now.  Employers will be paid upfront to cover wages but there will be a short period during the switch while the system is updated and payment will be in arrears for that time.

Employees must have been on an employer’s PAYE payroll by 23:59 on 30th October 2020 in terms of a Real Time Information (RTI) submission.  Claims will be for a minimum period of 7 consecutive calendar days.

If you have any questions on any of the issues mentioned in the above article, please contact Russell Eadie.

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