Legal Update by Tim Wilkinson.
It is not quite back to the beginning, but not far short. The Government’s announcement, on 31 October 2020, that England will commence a new national lockdown on 5 November 2020, heralds the extension of the CJRS. At the time of writing (2 November 2020), the Government’s Guidance is still being updated and the proposed legislation is yet to be published. The Guidance to date does, however, confirm that the CJRS will be extended “for another month”, until December 2020. There will be no break between the current version ending on 31 October and the extension beginning.
For some employers and employees the extension may, regrettably, come too late. It is unfortunate that some redundancies will have taken place in anticipation of the end of the furlough scheme, notwithstanding the promised Job Support Scheme (which is now postponed). However, the extension of the CJRS will be of relief to many, and it is important to highlight the following:
1) Eligibility for the scheme does not require the employer or the employee to have previously made use of the CJRS. This effectively reopens the scheme to new entrants, such as employees who have been employed since the scheme closed to (most) newcomers on 31 July 2020;
2) Whilst employees will still receive 80% of their wages, the extended period will see a return to a scheme more beneficial to employers than that which was running in October 2020. The public purse will now pay up to 80% of wages, up to £2,500, with the employer being required to contribute National Insurance and Employer Pension Contributions;
3) Flexible furlough will remain, such that employers will be able to maintain staff on part-time hours whilst claiming from the CJRS for those hours not worked because of the Coronavirus.
As stated above, we are still awaiting the finer details. It is expected that much of the CJRS, as it was, will remain. The current Guidance states, for example, that the calculation of hours not worked will “broadly follow the same methodology”. We can reasonably assume that the Scheme will operate in the same way in which it did previously, but we await confirmation. The Guidance suggests that there may be some delay in processing claims, whilst system adjustments are made to allow claims for the extended period.
Employers may need to take steps to renegotiate terms and conditions with those employees with whom agreement had already been reached in relation to arrangements under the Job Support Scheme. The Job Support Scheme’s minimum requirement, for the employee to work 20% of their usual hours, is not replicated under the extended CJRS’ flexible furlough, allowing employers to reduce those hours further without reducing the employees’ pay.
Similarly, thought will have to be given to those already under notice. There is no suggestion in the current Guidance that the CJRS grant will not be available in respect of those employees already working their notice. It is likely that some employees will seek to delay or extend their notice so as to take advantage of the extended CJRS, and employers will need to balance the risk of dismissing when funding is available, against whether or not such an agreement is within the spirit of the Scheme. In regard to those already dismissed, it is possible that employers may be able to rehire employees dismissed shortly before the extension in order to put them on the Scheme; there are reports that this will be available (as was the case when furloughing was originally introduced) but this is yet to be confirmed.
Agreement to any changes in terms is, of course, essential. There will be obvious situations where it is almost impossible to envisage employees not consenting. However, there may be more resistance where, for example, parts of a business remain open. Employers will need to ensure that their rationale for furlough in general, and their selection of candidates, is clear, fair, and thorough. Not only will this encourage agreement, it will reduce the prospect of future claims.