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Education briefing - Furlough extended for a further month

  • United Kingdom
  • Education - Briefings
  • Education - Coronavirus

03-11-2020

On 31 October 2020 the UK Government announced the introduction of additional public health restrictions in England with effect from Thursday 5 November (subject to parliamentary approval). Crucially for employers, the UK Government also announced an extension during November of the Coronavirus Job Retention Scheme (“CJRS”), often referred to as the ‘furlough’ scheme.

The CJRS was due to end on 31 October and be replaced by the Job Support Scheme (“JSS”). The JSS will now be introduced following the end of the extended CJRS, which is currently anticipated in December 2020. While the Government states that ‘there will be no gap in eligibility’ in relation to the CJRS’ extension, employers need to ensure that they have agreed with their employees a change in terms and conditions to permit a claim under CJRS.

In addition, while the CJRS has been extended “until December” (according to the press statement), given the uncertainty regarding the length of the latest restrictions in England, a further extension of CJRS under the same or lesser terms cannot be ruled out.

Extended CJRS overview

During this latest period of lockdown, the Government will pay 80% of wages up to a cap of £2,500 for hours not worked by the employee. The grant level is the same as applied under the CJRS in August. Employers must pay normal pension contributions and National Insurance Contributions and, as before, can choose to top up wages.

Flexible furloughing is permitted allowing employees to work part of their usual hours. For hours worked, the employer pays the employee in line with the existing contract/statutory minimum wage, as applicable. During furloughed hours, the employee must do no work (as per the earlier CJRS).

As before, the Government expects publicly funded organisations not to use the CJRS. In our briefing of 7 April 2020 we considered the extent to which the CJRS applied to education institutions – in summary our view is:

• an HEI can in principle use the Scheme but should do so only a) where it can show a significant operational impact from COVID19 that prevents the relevant staff group from working (or working their usual hours in full), and b) that it has considered the contents of the CJRS guidance (including that issued by the DfE) and the extent to which the wage costs that might be claimed are already attributable (to any significant extent) to public funding and c) that it has made its decisions on a considered basis, applying principles of good governance, and ensuring that there is a clear and defensible rationale for the decision. 

• in relation to general FE colleges, our view is that in most cases the application of the Scheme will be limited but it could apply to those areas of colleges’ services for which public funding will be impacted – in particular the apprenticeship training provision and trading income where activities have ceased or reduced as a result of CV19.

• as far as public sixth-form colleges and schools/academies are concerned, given the wording of the guidance, it is likely that there will be very limited opportunities to use the Scheme.

Which employees are eligible?

• Employers can claim for employees that were on their PAYE payroll at 23:59 on 30 October 2020. This will therefore extend potential application to those staff who missed the March ‘cut off’ for the earlier CJRS.

• If employees were on an employer’s payroll on 23 September 2020 and were made redundant or stopped working for the employer afterwards, according to HMRC, they can also qualify for CJRS if the employer re-employs them.

• Essentially, all those treated as an employee for Income Tax purposes will be eligible (this will include agency workers if they are employees for Income Tax purposes) and can be on any type of contract, including zero hours or temporary contracts.

• As flexible furlough is possible, employees may be placed on and off furlough and do not have to be working the same pattern each week, but each claim must cover a minimum period of seven consecutive calendar days. However, we expect this to be clarified in further guidance.

• There is no requirement for the employees to have been furloughed under the earlier CJRS.

• Employees (or their representatives) must agree to any changes made to their employment contract to reflect their new working arrangements and must be notified in writing by the employer. This agreement must be retained for five years, made available to HMRC on request and a record kept of how many hours employees work, together with the usual hours they are not working.

How much can be claimed under CJRS?

• There is no requirement for an employee to work for a minimum of their usual hours. However, where flexible furlough is applied, employers cannot claim for employees’ wages for the time they spend working.

• The employer will pay the Employer NICs and auto enrolment/relevant pension contributions.

• Employers must pay the full amount claimed for an employee’s wages to the employee. They cannot agree with the employee to reduce wages below the amount claimed (such as a salary sacrifice scheme). This includes any administration charge, fees or other costs in connection with the employment.

What rate of pay and hours will be is used to calculate usual pay/hours?

• According to the Government, the calculations will “…broadly follow the same methodology…” as the CJRS as at 31 October.

• Given the extension of eligibility for staff hired since the pandemic first impacted, the CJRS will need to set out the dates to be used to determine the relevant reference pay and hours. For those employees previously furloughed, it is unclear whether the same pay/hours will continue to be used for the extended CJRS or be updated. We suspect the former but this is to be confirmed.

Will the CJRS be available for the restrictions in the devolved nations?

• Yes, we expect so given the Government’s statement that “all UK employers” can access the CJRS. Therefore, for example, when the Wales ‘circuit breaker’ ends, CJRS will continue to be available. However, this is an evolving situation. For example, it seems that discussions with devolved administrations and, potentially, the English regions are ongoing in relation to additional funding for business support.

Will HMRC monitor the operation of the CJRS?

• Yes. Employers will need to report hours worked and the usual hours an employee claimed for would have been expected to work. Employers should keep records of their claims and the calculations and note the rationale for the decisions taken. HMRC has been writing to employers who have claimed under CJRS to ensure they have reviewed claims made and notified any errors which have resulted in overclaims. In summary, employers should be vigilant as regards compliance.