The government has announced the Coronavirus Job Retention Scheme (Furlough Scheme) has been extended in response to the impact of the new national restrictions which will require the population to stay at home and for non-essential shops to be closed.
New National Restrictions
At the end of October, the Furlough Scheme was set to end and would be replaced by the Job Support Scheme (JSS). The JSS has undergone a number of changes but ultimately was a far less generous scheme as it required employers to make larger contributions and employees would receive a lower level of financial support. The JSS has been postponed until the end of the Furlough Scheme.
However, from Thursday 5 November 2020 a new four-week lockdown across England will commence. The population of England must work from home wherever possible and may only leave their home for a limited number of exceptions (such as for exercise).
In response to new restrictions requiring non-essential shops, entertainment venues and all pubs, bars, restaurants to close, the government recognised the need for renewed financial support for the businesses impacted.
The Furlough Scheme will be extended until 31 March 2021. An employee placed on furlough will be able to receive 80% of current salary for hours not worked up to the cap of £2,500.
Employers will only be responsible for NICs and pension contributions but will be able to continue flexible furloughing and request that furloughed employees work for any amount of time and any work pattern.
The government will not pay the Job Retention Bonus in February 2021 as planned and has instead said that it will “redeploy a retention incentive at the appropriate time.
The Furlough Scheme which has been in place through October was less generous than the revised scheme. The government only contributed 60% of normal pay up to a cap of £1,875 and the employer contribution was 20%.
Key Questions Answered
Is the eligibility for the new Furlough Scheme the same as previously?
It is similar but the scope has been extended further. For a business to claim for an employee on furlough the employee must have been on their PAYE payroll before 23:59 on 30 October 2020. As with the previous scheme an employee with any type of contract is eligible
Can employers top up a furloughed employee’s wages?
Yes – An employer may choose to top up employee wages at their own expense.
Do employees need to have been on furlough previously?
No – There is no requirement for an employee to have previously been on furlough. However, employers will need to claim for a minimum period of 7 consecutive calendar days.
Can an employer re-hire an employee to place them on furlough?
Yes – An employee that was employed and on the payroll on 23 September 2020 but who was made redundant or stopped working for their employer after that date can be re-employed and furlough can be claimed.
The extension of the Furlough Scheme will be welcomed by many businesses and represents a lifeline for surviving the impact of the national restrictions.
For businesses who had intended to utilise the JSS they will now need to manage which employees to be placed or kept on furlough. Good communication with employees is paramount in managing the transition to the new furlough effectively.
Employers must be careful when determining which employees to place on furlough. The provisions of the Equality Act 2010 continue to apply, and employers must remain conscious that all decisions impacting the employees will be subject to scrutiny. Certain adjustments to working practices in response to COVID-19 may have unintended and discriminatory consequences. Consequently, a robust and fair process must be adopted.
Whilst the revised Furlough Scheme presents a lifeline to many businesses and employees, there will also be certain industries where redundancies remain inevitable. Businesses should consider if redundancies can be delayed whilst the more generous Furlough Scheme is in place. The usual redundancy requirements continue to apply including a minimum consultation time.
We can advise on complexities of the Furlough Scheme and how it will impact your business and provide bespoke agreements for varied working arrangements with employees. If you have any queries relating to the Furlough Scheme or surrounding employment law issues Sharpe Pritchard is well placed to assist. The Employment Partner Julie Bann has expertise in advising on all employment law-related issues from drafting and revising employment contracts and procedures to resolving internal disputes.
This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this article, please contact us today by telephone or email firstname.lastname@example.org.