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Furlough Scheme Extended as New National Lockdown Announced

The government announced on 31 October 2020 that a new national lockdown is due to begin on Thursday 5 November 2020. The lockdown will last until at least 2 December 2020 and during this time all leisure facilities, entertainment venues and non-essential retailers must close. Those who can, must work from home continuing arrangements which, for many, have been in place for some months.

In a surprising turn of events, the government also announced that the Coronavirus Job Retention Scheme (CJRS), which was due to come to an end on 31 October 2020, would be extended in order to provide support to businesses and employees during the new national lockdown. It therefore remains available to businesses as of today and will be open until December.

Crucially, the Government will pay 80% of wages up to a cap of £2,500 per month without any contribution towards pay being required from employers. This is in contrast to the position in September and October when employers had to make a contribution of 10% and 20% respectively. Flexible furloughing is also allowed and as before employers can claim the grant for the hours that their employees are not working, calculated by reference to their usual hours worked in a claim period. When claiming the CJRS grant for furloughed hours, employers need to report and claim for a minimum period of seven consecutive calendar days.

For any period claimed, employers are obliged to pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way. Employers are still able to top up employee wages above the scheme grant at their own expense if they wish.

No detailed guidance on the mechanics of the CJRS extension has been published as yet, but HM Treasury has outlined the eligibility rules that will apply. These include that neither the employer nor the employee needs to have previously used the CJRS, and that the scheme is available in respect of employees who were on the employer’s PAYE payroll by 23:59 on 30 October 2020.

The government will confirm shortly when claims can first be made in respect of employee wage costs during November but it has been made clear that there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

Employers who have furloughed employees using the CJRS may be eligible for a one off job retention bonus of £1,000 in respect of each furloughed employee who remains employed as at 31 January 2021. This is providing that the employee is not in their notice period and has been continually paid earnings above a certain amount. It is currently unclear whether the bonus will be available for employees who are only furloughed under the CJRS extension.

The Job Support Scheme, which was to replace the CJRS, had been scheduled to come into effect on 1 November 2020 but its introduction has now been postponed until the CJRS extension ends.

The extension of the CJRS is welcome news but its announcement may come too late as many employers will have made redundancies on the understanding the CJRS was closing on 31 October 2020.



The contents of this briefing are for information purposes only. All circumstances are unique and the information and opinions expressed in this document do not constitute legal advice and should not be regarded as a substitute for legal advice. No liability is accepted for the opinions contained or for any errors or omissions.

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