Update (March 4, 2021): Following the UK government’s announcement on 22 February 2021 of an exit roadmap of the current lockdown and phased relaxation of social distancing rules, the UK Coronavirus Job Retention Scheme (CJRS) will be extended by a further three months until the end of September 2021. For more details, please see our alert on the topic.
Following the UK government’s announcement of a new national lockdown for England in response to the continuing COVID-19 crisis and the recent one-month extension of the Coronavirus Job Retention Scheme (CJRS), originally due to close 31 October 2020, on 5 November 2020 the UK government announced a further extension of CJRS by an additional four months. Accordingly, the CJRS will now run until 31 March 2021, with a review date in January 2021.
Employers will be able to claim 80 percent of a worker’s normal salary for hours not worked, subject to a cap of £2,500 per month for claim periods running up until January 2021. (It is likely that the level of grant will be reduced if the public health situation improves, as before.) Employers must cover employer National Insurance and pension contributions for those hours not worked and operate tax withholding on any grant in the usual way.
Employers will be able to claim, either in arrears or in advance, from 8 a.m. on 11 November 2020. Grant payments are anticipated to be made six working days after the first claims. Claims in respect of November should be made on or before 14 December 2020 and each subsequent month’s grant should be claimed by the 14th of the following month.
An employer must have made a PAYE Real Time Information (RTI) submission to HM Revenue & Customs between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee in order to make a claim under the CJRS. For more details on employer and employee eligibility, please refer to McGuireWoods’ 2 November 2020 insight.
Shielding and sick leave
The UK government has made it clear that the CJRS is not intended to cover employees who are on short-term sick absences. However, if employers need to furlough employees for business reasons and have employees who are on sick leave, those employees may be eligible to be furloughed.
Employees who were furloughed and then become infected with COVID-19 (or become sick for any other reason) must be paid at least Statutory Sick Pay. It will remain up to employers’ discretion to elect whether to keep those employees on furlough or to transfer them onto Statutory Sick Pay.
As before, employees are eligible to be furloughed where they are shielding in line with UK government guidance or have caring responsibilities for a dependant due to COVID-19.
Employees who were made redundant or whose fixed term contract expired, but who were employed and on their employer’s payroll on 23 September 2020, can be re-employed and furloughed, providing an RTI submission was made on or before 23 September 2020. Accordingly, those employees who were made redundant in anticipation of the wind-up of the CJRS on 31 October 2020, may request to be re-employed, although there is no obligation on their former employer to do so.
The employer must confirm in writing with the employee, or have reached a collective agreement with the trade union, that the employee was furloughed, and the employer must maintain a record of the agreement for five years. Employers should maintain for six years the records of employees’ hours worked and the hours they were furloughed.
Job Support Scheme and Job Retention Bonus
The Job Support Scheme has now been postponed because of the much longer extension of the CJRS. The Job Retention Bonus of £1,000 for each retained worker, which was designed to incentivise employers to retain workers until January 2021, has been put on hold because of the CJRS extension and will no longer be paid in February 2021.
The UK government plans to publish more details on the operation of the CJRS on 10 November 2020. Details about the current scheme are available in its policy paper.
For advice in relation to the extended CJRS, its operation or to associated issues — for example, compliance with discrimination law in respect of decision-making around furloughing workers — please contact Dan Peyton or Adam Penman.
McGuireWoods has published additional thought leadership analyzing how companies across industries can address crucial business and legal issues related to COVID-19.