UK: Coronavirus Job Retention Scheme Extended And Guidance On Job Support Scheme Published

Coronavirus Job Retention Scheme extended and Guidance on Job Support Scheme Published 

On 31st October the government announced that The Coronavirus Job Retention Scheme has been extended for a month. On the same date, detailed information was published on the new Job Support Scheme which has now been postponed from the original start date.

Extension of the Job Retention Scheme

Under the terms of the Coronavirus Job Retention Scheme (CJRS) extension, employees will continue to receive 80% of their usual pay for hours not worked, up to a maximum cap of £2,500. Employers will retain the flexibility to bring furloughed employees back to work on a part-time basis (flexible furlough) or furlough them full-time (full furlough). The government will pay the 80% and employers will only be required to cover employers' NI and pension contributions for furloughed hours,  effectively the same level of CJRS grant as applied in the month of August. Employers must continue to pay the employee for any hours worked in the normal way.

The other key highlights are:

• the extended CJRS will operate in the same way as the current CJRS, with employers being paid upfront to cover wage costs. However there will be a short delay in payment whilst the government updates its systems, and so employers will be paid in arrears for that period.
• to be eligible to be claimed for under the extended CJRS, employees must be on the PAYE payroll by 23:59 on 30 October 2020. This means an RTI submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.
• as per the CJRS rules, employees can be on any type of contract and employers are free to agree any working arrangements with them.
• employers can claim the grant for the hours the employees aren't working, calculated by reference to their usual hours worked in a claim period; when claiming the extended CJRS grant for furloughed hours, employers need to report and claim for a minimum period of seven consecutive calendar days; employers need to report hours worked and the usual hours an employee would be expected to work in a claim period; for worked hours, employers need to pay staff in accordance with the terms of their employment contract and employers will be responsible for paying the NI and income tax due on those amounts.
• Employers can choose to top up employees' wages above the extended CJRS grant at their own expense but they don't have to do so.
• all employers with a UK bank account and UK PAYE scheme can claim the extended CJRS grant – neither the employer nor the employee needs to have previously used the CJRS
• there will be no gap in eligibility for support between the previously announced end-date of the current CJRS and the extension.

At the time of publication, it's not clear yet whether the extended CJRS will cover just the calendar month of November, or whether it will run until 2 December, which is the date when the new national restrictions are due to end.

The commencement of the Job Support Scheme (JSS), which comprises JSS Open (for open business premises) and JSS Closed (for closed business premises), has been postponed until the CJRS ends. The JSS will then be introduced following the end of the CJRS.

Further guidance, including on how to claim the extended CJRS support through an updated claims service, is expected to be published shortly.

In summary, furlough can be flexible or full and the government will then fund 80% of employees' usual pay for their furloughed hours, subject to a cap of £2,500. Employers only need to pay employers' NI and pension contributions on that furlough pay, plus employees' contracted wages for any worked hours. The Job Support Scheme has been postponed and will now be introduced after the extended CJRS ends.

Guidance on the Job Support Scheme

The JSS provides a partial contribution to wages for employers whose operations are affected by the COVID-19 pandemic.  The JSS is split into the "JSS Open" which applies to businesses that are able to remain open but face reduced demand and "JSS Closed" which applies to businesses who are legally required to close their premises as part of local or national restrictions.

Under JSS Open, employees work at least 20% of their usual hours, which are paid for by the employer. Employees will then receive 66.67% of their normal pay for the hours not worked, with the cost shared between the employer and the Government.

The employer pays 5% of normal pay for the hours not worked up to a cap of £125 per month, while the Government contributes 61.67% up to a cap of £1,541.75 per month.

Under JSS Closed, the Government will contribute two thirds of normal wages, up to £2,083.44 per employee per month, for any employee who cannot work due to the closure.

An employer which is legally required to close can claim under JSS Closed and JSS Open at the same time (in respect of different employees) where it has some employees who cease work altogether and others who work reduced hours (e.g. HR and payroll staff).

The Government guidance  provides important clarity for businesses as to how it will operate and what the requirements are in practice.

The guidance confirms that:

• To remain eligible for grants under the JSS, employers must pay employees first on their usual payment dates. This includes any Government subsidy which is later reclaimed. Failure to pay employees on time will result in businesses not being eligible.
• When claiming under the JSS, employers may be asked to confirm they are experiencing reduced business activity due to COVID-19.
• Employers will have flexibility to determine what will count as work for the hours that employees are working so will not be tied to requiring employees to do their usual duties.
• Employers will be able to rehire employees who stopped working for them after 23 September 2020 and claim for them under the JSS (but not for employees who stopped working before 23 September 2020 even if subsequently rehired).
• To be eligible for the grant, a written temporary working agreement must be put in place with each employee before the temporary working agreement commences.  Employees must agree to the temporary working agreement but do not have to provide a written response to do so.

The temporary working agreement does not have to prescribe a certain number of hours that the employee must work but to be eligible for the JSS the employee must work at least 20% of their usual hours.  The Government has confirmed that it will publish a checklist of what the temporary working agreement should include by 6 November but the checklist will not be mandatory and businesses can use their own format.

• In line with the furlough arrangements, employees are prohibited from doing any work which makes money for the business (or any linked organisation) or providing services for the business (or any linked organisation) during the hours not worked.
• Employees shall continue to accrue holiday as per their employment contracts and any holiday taken during the JSS must be topped up to full pay, although it is possible for the employer and the employee to agree to vary holiday entitlement as part of the temporary working agreement provided annual leave does not go below the statutory minimum.

The test to determine whether a business is a "large employer" (i.e. having 250 or more employees as at 23 September) is calculated on an entity by entity basis so will not be inclusive of group company data.

This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our  Employment Team at Cleaver Fulton Rankin for further advice or information.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.