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COVID-19: Furlough scheme updates announced

Posted on 2 November 2020

On Saturday 31 October 2020, Boris Johnson announced that new lockdown restrictions to combat the spread of COVID-19 will be introduced in England. The restrictions are expected to come into force on Thursday 5 November 2020 and to continue until at least Wednesday 2 December 2020.

In order to financially support businesses whilst these restrictions remain in place, the Government has extended the Coronavirus Job Retention Scheme (the "CJRS"), otherwise known as the furlough scheme. The CJRS was originally due to end on Saturday 31 October 2020 and be replaced by the Coronavirus Job Support Scheme (the "CJSS"). Instead, the Government guidance states that the CJRS will be extended until "December" and the introduction of the CJSS will be delayed until a future date (likely to be immediately following the lifting of the new lockdown restrictions set out above, at which point it is expected the CJRS extension will be withdrawn).

Only limited details have been announced so far, but it appears that the CJRS will effectively revert to how it operated in August 2020 and that the following will apply.

How is the scheme expected to work?

  • Employers will be reimbursed up to 80% of an employee's salary for hours not worked up to a maximum of £2,500 per month. When claiming the grant, employers need to report and claim for a minimum period of 7 consecutive calendar days. For each claim period, they also need to report the hours actually worked and the usual hours an employee would have been expected to work.
  • Sums claimed under the scheme must be paid to employees in full and employers may choose to top up employee's wages above the cap at their own expense.
  • Employers must pay employer NICs and pension contributions on all sums paid to employees.
  • Employers may place employees on furlough on either a full-time or a flexible basis. Employers must agree with employees in writing that they are to be placed on furlough leave, and on what basis (i.e. full-time or flexibly).
  • The Government has said that it will confirm shortly when claims can first be made in respect of employee wage costs during November, but that there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

Who is eligible?

  • Employers must have a UK bank account and UK PAYE scheme(s). 
  • Employees must have been be on the employer’s PAYE payroll by 23:59 on 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
  • Neither the employer nor the employee need to have previously used the furlough scheme.
  • Employees can be employed on any type of contract.
  • Whilst the new restrictions have only been introduced in England, the CJRS will be open to all employers across the UK.

Please contact Will Winch, Matthew Wood or Suresh Patel, or your usual Mishcon contact if you would like to discuss the above in further detail.

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