The government’s announcement to extend the Coronavirus Job Retention Scheme (CJRS or furlough) at the twelfth hour came as both a blessing and an exasperation to many businesses.
For some, in sectors hit hardest by the ramped up trading restrictions, the decision to extend the scheme until March 2021 is a lifeline to keep thousands of jobs available to those who may otherwise be forced into redundancy and unemployment.
For others, it marked a logistical nightmare to reconcile employees whose employment had already been scheduled for termination, redundancy, or changes at the close of the existing scheme on the 31 October.
However, regardless of reaction, the scheme itself offered a few changes to the preceding schemes, the key changes being:
- The CJRS extension will be reviewed in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions
- From December 2020, HMRC will publish employer names for companies and Limited Liability Partnerships (LLPs) of those who have made claims under the scheme for the month of December onwards
- From 1 November 2020, employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month
- Employers can claim for employees who were employed on 30 October 2020, as long as they have notified HMRC of a payment of earnings for the employee between 20 March 2020 and 30 October 2020, unless they re-employed an employee after 23 September 2020
- There is no maximum number of employees that employers can claim for
- Employees returning from maternity leave need to give the statutory eight weeks’ notice to end maternity leave early in order to be furloughed
- The employer must confirm in writing to the employee that they have been furloughed and keep a written record for five years
- Claims may not be made for any day that an employee is serving notice between 1 December 2020 and 31 January 2021 (the latest guidance refers to both statutory and contractual notice periods).
Redundancy Pay Support
The hope from the Chancellor is that the extension of such generous support measures will drastically decrease the need for organisations to execute excessive redundancies at the end of the furlough period. However, inevitably for some, this is likely to still be the case come the end of March.
Organisations are encouraged to continue to consider their longer-term positions and to plan carefully for changes to their business structure over the next three-six months. For those in the unenviable position of considering redundancies, it is important that the financial impact has been considered, particularly regarding associated statutory redundancy costs for employees.
Failure to provide employees with their statutory pay may result in employers facing lengthy and expensive tribunal proceedings with judgements awarding redundancy pay. These can be both stressful and time consuming for both parties.
Government support is available for organisations unable to meet statutory redundancy costs through the Redundancy Payments Service. In essence, this service allows businesses (who are still trading and not formally insolvent) to have redundancy payments made to the employees directly. The costs are then recovered from the employer by separate arrangement.
It is worth noting that RPS can only cover statutory redundancy pay, not additional types of pay such as payment in arrears, notice pay or holiday pay (unless the organisation has formally entered insolvency proceedings).