October 27, 2020
The Coronavirus Job Retention Scheme (aka the Furlough Scheme) has been extended until the 31 March 2021. It was initially extended to the end of the lockdown in England (due to end 2 December) but now is an additional 4 months’ long.
This is good news for businesses and employees.
In a nutshell:
- Employers across the UK don’t need to have used the Scheme before
- Employees will receive 80% of their usual salary for hours not worked up to a maximum of £2500 per month (with the same pay for hours worked to be paid by the employer). The employer contribution will be reviewed in January 2021.
- It can be used for any amount of time or shift pattern (so on a full time or part time basis) (NB the claim period is a minimum of 7 consecutive calendar days)
- It can be used for employees that haven’t been previously furloughed and including those shielding or who have caring responsibilities resulting from coronavirus
- Employees employed on 23 September and made redundant can be re-employed and claimed for
The Job Retention Bonus will not be paid, the Job Support Scheme has been postponed.
More detail of the scheme can be found here: Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme, including the pay calculations for those that have not previously been furloughed and records needed.
Where were we before this announcement?
Just under a month ago the Chancellor, Rishi Sunak, announced the Job Support Scheme to help businesses with staff wages and retaining employees. We wrote about the key points at the time in our blog, which you can read in our Move Over Furlough blog.
However, since that announcement, although the Scheme hasn’t kicked in yet, it has been updated twice!
Happily, the new amendments are good news for open businesses in any tier:
- Previously employees had to work at least 33% of their usual hours, which is now reduced to 20% (so 1 day per week for someone who was full time on 5 days pre furlough). This opens the Scheme up to more employees.
- The employer contribution for hours not worked has dropped from 33% to 5%.
There has also been an extension to the Scheme. It now applies to all businesses required to close their premises due to coronavirus restrictions. So, this is where the employees can’t even work reduced hours. It is expected to primarily benefit the hospitality and leisure sector.
The revised Job Support Scheme
In short, the Scheme has been split into two schemes: JSS Open and JSS Closed.
- JSS Open applies to businesses that have not been required to close due to lockdown regulations but have a lower demand.
- The minimum employee hours requirement has been reduced from 33% to 20%.
- Employees will be entitled receive normal pay for the hours they work, and 2/3 pay for the hours they do not work up to a maximum of £1541.75 per month.
- The employer contribution to wages has been significantly reduced from 33% to 5% up to £125 per month (plus pension and NI contributions).
- Employers must agree this change in writing with their employees and it must cover at least 7 consecutive days.
- JSS Closed is for businesses legally required to close due to lockdown regulations.
- Subject to the same cap as JSS Open, employees will receive 2/3 of their normal wages from the government up to a maximum of £2083.33 per month.
- The Employer contribution will be only the pension and NI contributions on the 2/3 wages.
- Employers must agree this in writing with their employees and employees need to be off work for a minimum of 7 days consecutively.
What changes apply to both schemes?
- Employers can top up wages beyond the contributions set out in the schemes.
- Employees made redundant or serving a contractual or statutory notice period during the claim period will not be eligible under the scheme.
- Large businesses with 250 employees or more are eligible for the scheme if they can evidence falling turnover due to coronavirus and are expected not to make capital distributions. All SMEs are eligible for the schemes.
Full details on the Schemes, how to make a claim and how to calculate salaries and hours are set out in the government guidance, which you can find here: Check if you can claim the Job Support Scheme.
Don’t forget that the Job Retention Bonus is staying in place. Employers can get a one-off payment of £1000 for every furloughed employee who remains employed earning £520 per month on average from November to 31 January 2021.