EMPLOYMENT LAW

Update: Extension of the Furlough Scheme

This morning the Chancellor made a remarkable statement to the House of Commons, confirming rumours that the Coronavirus Job Retention or ‘Furlough Scheme’ would be extended until 31st March.

In a moment of last minute drama at the weekend, it had been announced that the scheme would run until December and with the implementation of planned Job Support Scheme (‘JSS’) being pushed back. The central purpose of the scheme has always been to protect jobs and livelihoods, indeed this appears as prudent as ever with all corners of the UK falling under varying lockdown restrictions.

Employers will be forgiven for any confusion as this latest development marks the fourth version of the Chancellor’s winter economy plan inside six months. The prospect of fortified support will undoubtedly be welcomed by many, as businesses attempt to traverse what will be a difficult winter. Questions do however remain however with as to the precise scope of the provisions. This article summarises what we know at this time as we anticipate further guidance being provided next week.

Broadly the scheme remains unchanged, there are however some nuances employers should be aware of. In a reversion to the more generous provisions offered during the summer, employees will receive 80% of their salary for hours not worked, up to a cap of £2,500 per month. All employers will have to pay is national insurance and pension contributions. The Scheme will go under further review in January, whereby it will be considered whether the economy has improved sufficiently to allow for increased employer contributions.

To be eligible for the scheme it is inconsequential whether businesses are open or have been forced to shut by government measures. There is no requirement for an individual employee to have been ‘furloughed’ in the past in order to be eligible, employers must however provide an RTI submission between the 20th and 30th of October 2020. Additionally, the flexibility component is retained meaning employees can continue to work some hours. Furthermore, to coincide with the announcement the Treasury has directed that employees who were on payroll as of 23rd September 2020 and were subsequently made redundant can be reemployed and then claimed for.

It appears the JSS due to begin this month has been forgotten about for now, as it was reinforced that this is not the right time to transition. Equally, another casualty of the announcement is the Job Retention Bonus promised to businesses who retained Furloughed employees until 31st January.  2021. The Chancellor indicated that the goal posts had moved and some form of job retention incentivisation will be put in place when the time was right. This  will undoubtedly be frustrating for employers who were factoring in receipt of this bonus in their workforce planning considerations.

Should you require advice or assistance in relation to any of the above please do get in touch with Jan Cunningham or David Mitchell in our Employment Team

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