Extended CJRS: New government guidance published
We look at the updated guidance on the extended scheme, aimed to help employers navigate the detail of the next phase.
The last-minute announcement of the extension of the Coronavirus Job Retention Scheme (‘furlough’) to 30 November 2020, and subsequently to 31 March 2021, took many UK employers by surprise, and raised a number of urgent unanswered questions.
However, the government has now published updated guidance on the extended scheme, spread over multiple documents, to help employers navigate the detail of the next phase of furlough, and to work out how much they can claim.
In our recent update we outlined the scheme terms that will apply from November onwards. As a reminder, the government will fund up to 80% of employee wage costs, to a maximum of £2500 per month. National Insurance and pension contributions must be funded by the employer. Employees may be furloughed either full-time or flexibly, and there is no minimum number of hours that an employee must work to be eligible.
Importantly, the government contribution to wage costs will remain at 80% until 31 January 2020, following which it may potentially be reduced following a government review early in the new year.
Four pieces of updated guidance, including numerous worked examples, have been produced to assist employers with complex furlough calculations (for example; calculate how much you can claim using the Coronavirus Job Retention Scheme).
In recognition of the fact that the extension of furlough was announced on the final day of the original scheme, the government guidance allows employers to retrospectively furlough employees to 1 November. However, furlough agreements must be in place by Friday 13 November or the employer will lose the right to claim for the first two weeks of the extended scheme.
It does not appear that there is any deadline for re-hiring employees who have previously been made redundant in order to furlough them.
Employers can claim for furlough periods under the original scheme (i.e. up to and including 31 October) until a deadline of 30 November 2020, following which the right to claim for those periods will be lost. The less generous government contribution of 60% of wage costs, which was in force in October, will continue to apply to any claim periods up to and including 31 October.
Notice and notice pay
When furlough was first introduced in the Spring, there was some confusion over whether employees serving notice were eligible under the scheme and if so, whether claims could be made during statutory notice periods only, or during longer contractual notice periods. Unfortunately, some inconsistency between the various newly published pieces of government guidance has reopened that debate to some extent.
However, our view, based on current guidance, is that it remains possible to claim furlough payments for employees during either a statutory or contractual notice period. The updated, employee-facing version of the guidance (check if your employer can use the Coronavirus Job Retention Scheme) confirms that “Your employer can still make you redundant while you’re on furlough or afterwards. Your employer can continue to claim for you while you are serving a statutory or contractual notice period”. This accords with the approach taken by the government under the previous scheme.
However, alarmingly for employers, the same guidance suggests that CJRS funding for notice periods may potentially soon be withdrawn. It states that “the government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November 2020”. So, the working assumption must presently be that this position is likely to be reversed from 1 December.
We know that many employers were awaiting confirmation of whether employees joining an organisation under TUPE would continue to be eligible for furlough funding.
The new guidance; 'check which employees you can put on furlough to use the Coronavirus Job Retention Scheme' confirms that employees incoming under TUPE will be eligible for furlough in the next phase of the scheme, as long as they were employed by their previous employer on or before 30 October 2020, and transferred to their new employer on or after 1 September 2020 (HMRC has confirmed that a confusing reference in the guidance to transfer “on or before 1 September 2020” is an error).
Sickness absence and furlough
One of the questions we are most frequently asked is whether employees who are on sick leave can be furloughed. The updated government guidance; 'check which employees you can put on furlough to use the Coronavirus Job Retention Scheme' reiterates that this is possible. While the guidance states that short-term illness/self-isolation should not necessarily be a consideration in deciding whether to furlough an employee, if “employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees. In these cases, the employee should no longer receive sick pay and would be classified as a furloughed employee”.
Again, however, the guidance contains a confusing reference to a requirement that sick furloughed employees must previously have been furloughed prior to 31 July 2020 to be eligible. We presume that this sentence has been carried over in error from earlier iterations of the guidance. It remains our view that an employer can furlough an employee who is on sick leave, during the extended scheme period, even if they have not been furloughed before.
Updated 'guidance on shielding and protecting extremely vulnerable people from COVID19' confirms that employees required to shield during the period of enhanced national restrictions are eligible to be furloughed by their employer.
Holiday pay and furlough
The government’s guidance on 'Holiday Entitlement and Pay during COVID-19' has not been updated to coincide with the extension of the scheme and appears unchanged. It therefore presumably remains the case that employees may take annual leave during a period of furlough, and must receive 100% of their usual pay during any leave periods, so there is a need for the employer to top up beyond the 80% level.
It is unfortunate that the various pieces of government guidance on the extended scheme contain a number of errors and inconsistencies. However, this is perhaps unsurprising, as the updated scheme rules have been put together at speed, and are based on previous documents (relevant to the March-October scheme) which themselves went through multiple iterations.
The most significant new development for employers is the suggestion that CJRS funding may no longer be available for notice periods beyond November. This may hark back to the original stated aim of “job retention” which has to some extent become blurred since the scheme’s introduction. While no decision has yet been made on this issue, such a change would echo the terms of the indefinitely postponed Coronavirus Job Support Scheme, which expressly focussed on subsidising only viable jobs, and did not permit employers to fund employee notice periods using the support scheme grant.
As things stand, to be sure of recovering all notice pay costs under the scheme, employers must serve notice to expire before 1 December 2020. This may have strategic implications for employers currently planning redundancies, and of course may not be possible where redundancy consultation is in its early stages.
Interestingly, this latest raft of government documents contains new guidance on how to pay Coronavirus Job Retention Scheme grants back in the event that an employer has over-claimed, or no longer needs the grant and wishes to return it voluntarily. This follows media reports that UK employers have repaid over £251m in furlough funds, a practice that the government may be keen to encourage given the rapidly mounting costs of the scheme.