02 Nov Practical business advice: COVID-19

Furlough Scheme extended by a month with JSS delayed (1 November 2020)

This blog will be updated as details are confirmed by the government over the next few days.

On Saturday, literally hours before the furlough, or Coronavirus Job Retention Scheme (JRS) was due to close, the Prime Mister announced that the scheme would be extended until 02-Dec as the result of a second national lockdown in England.

The original furlough scheme subsidised 80% of the gross pay of employee who could not work, either because their workplace was closed or because their employer could not provide sufficient work for them to cover their normal hours.

Over recent months, employees have continued to receive 80% of wages and salaries for the hours they could not work, but employers could only reclaim 70% and then 60% of furlough pay from the government.  Since August, employers were also unable to reclaim the National Insurance and employer’s pension contributions due on gross furlough related wages and salaries.

From July, employers have been able to bring back employees part-time, under the flexible furlough scheme, and furlough employees for the remaining time. This will continue under the newly extended Coronavirus Job Retention Scheme.

The Prime Minster has now announced that the Job Retention Scheme is to be extended until 02-Dec and the Job Support Scheme is on hold.

As a result of the announcement, employees will continue to receive 80% of their pay, up to a maximum cap of £2,500, for the hours that they do not work. The extended scheme will become more attractive to employers as the government will only ask them to pay the employers’ national insurance and pension contributions for furloughed hours in a similar way to the furlough scheme up to 31-Jul.

To be eligible under the extended Coronavirus Job Retention Scheme, employees must be included on an RTI payroll submission before 31-Oct-2020, though employees did not have to have been furloughed before that date.  This change therefore opens up the extended furlough scheme to recently employed persons who were not eligible after the start date of the original scheme.

As under the current Coronavirus JRS scheme, employees can be working under any type of contract, including zero hours’ contracts and employers will be able to agree working arrangements with employees.

When making a claim under the extended scheme, employers will have to report the hours worked and the usual hours worked. For the worked hours, employers will have to pay employees under the terms of their employment contract.

Employers will be required to pay their staff and then reclaim wages and salaries from HMRC.

Once the lock down is lifted the Open and Closed Job Support Scheme will be launched.

Under the JSS Closed scheme, if a business is still forced to remain closed after 02-Dec, due to local Coronavirus restrictions, employees will be paid 67% of their wages and salaries and employers can reclaim this from HMRC.  Employers under the JSS Closed scheme will not have to contribute towards employees’ pay.

The JSS Open scheme would then be able to employees and employers, allowing affected employers to bring back their employees on a part time basis.  If they work at least 20% of their normal hours, then they will be eligible for 67% of pay for the hours not worked.

The government will also give affected businesses up to £3,000 pm under the Local Restrictions Support Grant if their premises are forced to close.

Employers would still be entitled to the previously announced £1,000 Job Retention Bonus for every furloughed employee retained in employment until at least 31 January 2021.