Furlough Scheme Extended Until 31 March 2021
On 5 November 2020, the Chancellor announced that the furlough scheme will be extended until the 31 March 2021, with a review to take place in January 2021. This update is based on our current understanding of the rules, as published on 6 November 2020.
In our previous article, we confirmed that the Government was going to extend the Coronavirus Job Retention Scheme ('CJRS') until 2 December 2020, which is the current duration of the national lockdown in England.
However, yesterday the Government announced that, as the impact of lockdown extends beyond the duration of the lockdown itself, the CJRS will be extended until 31 March 2021. Unless otherwise stated, the rules will remain the same as under the previous extension of the CJRS (as covered in our previous article). A review will be carried out in January 2021 to decide whether economic circumstances are improvising to the extent that employers will be asked to contribute more.
Changes to the CJRS
One important point for employers to note is that, for employees who have previously been furloughed, the same calculations for calculating their reference pay and usual hours must continue to be used.
However, for those who have not previously been claimed for under CJRS, the alternative calculations of reference pay and usual hours must be used. Therefore, if someone is being furloughed for the first time starting on or after 1 November 2020, 80% of their wages must be calculated as:
- if they have a fixed salary, 80% of the wages payable in the last pay period ending on or before 30 October 2020
- if their pay varies 80% of the average between (and inclusive of) the start date of their employment, or 6 April 2020 (whichever is later) and the day before their furlough period begins
To calculate the average hours of an employee who had not been previously furloughed, the following should be used:
- for fixed hours (and pay does not vary according to the number of hours they work), it will be the contracted hours worked in the last pay period ending on or before 30 October 2020
- for an employee with variable hours, it will be the average hours worked between (and inclusive of), the start of the 2020 to 2021 tax year (for example 6 April 2020) and the day before their furlough period begins
Examples of how to calculate this can be found on the Government website.
Job Support Scheme (JSS)
Because the CJRS has been extended, the JSS has been postponed and it is not known when/if this will start. The Job Retention Bonus will not be paid in February 2021 as previously thought.
Full guidance on the extended CJRS is expected on 10 November and we will keep you up to date with the changes.