Boris Johnson has announced that the Coronavirus Job Retention Scheme will be extended rather than closed as originally planned. The extension will cover the new lockdown in England which started on Thursday 5 November and is expected to last until Wednesday 2 December.
The Coronavirus Job Retention Scheme (or furlough scheme) was originally planned to end on 31 October. The new Job Support Scheme (JSS) was set to launch on 1 November. However, Boris Johnson announced that the furlough scheme will be extended, having previously resisted calls for such an extension. Here’s what you need to know:
- To avoid having two schemes running simultaneously, JSS has been delayed. JSS will now launch when the new furlough extension ends.
- The extended furlough scheme will continue “until December”. The precise end date is unclear, but the English lockdown restrictions look set to be in place until 2 December. The government will pay up to 80% of an employee’s normal pay, capped at £2,500 and employers will be responsible for NICs and pension contributions.
- The existing furlough scheme was in the final stages of being wound down. For the last three months the government contribution has been reducing whilst the employer contribution has been increasing. For October, the current maximum government contribution under the furlough scheme was 60% of normal pay (up to a cap of £1,875) and the employer contribution was 20% (up to £625). However, the extended furlough scheme will put the clock back to how things were in August, when the government contribution was 80% of wages up to a cap of £2,500 and employers just paid employer NICs and pension contributions.
- Flexi-furlough will continue to be an option, so employees can work part-time and receive a furlough grant for unworked hours.
- The JSS was divided into two parts – JSS Open (for businesses operating but where employees are working at least 20% of their usual hours) and JSS Closed (where the business is legally required to close its premises and employees have no work to do at all). Under the JSS Closed, the government would have paid 67% of employee wages, up to a maximum of £2,083.33 a month. Under JSS Open the position was more complicated but the government contribution was capped at a maximum of £1,541.75 per month and the employer contribution was capped at £125 per month. This means that the extended furlough scheme is more generous than both JSS Open and JSS Closed.
- The government has widened the furlough scheme so that, to be eligible to be claimed for under this extension, employees must simply have been on an employer’s PAYE payroll before midnight on 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020. This will come as particularly welcome news for those employees who have never qualified for furlough but who would have been eligible for JSS, including recent starters and employees who carried on working throughout the pandemic and never stopped work for three consecutive weeks before 1 July (a pre-condition of eligibility for the furlough scheme after July).
- Many businesses have already put in place JSS Open Agreements in anticipation of the scheme’s launch on Sunday 1 November. Those businesses should contact affected employees as soon as possible to explain that the government has made a last-minute decision to extend the furlough scheme and to ask them to agree to continue on furlough instead.
If you have any questions, or would like me to send you possible wording for urgent communication to your employees, please get in touch straight away by calling me on 0118 940 3032 or clicking here to email me.