Updated 6 January 2021
Job Retention Support
At the start of November a second national lockdown was put in place, bringing in tough restrictions on movement and trade, until 2 December 2020. In support of this significant changes were made to the financial support being made available to employers to protect as many jobs as possible.
The Job Support Scheme, which was due to go live on 1 November 2020 and provide financing for viable jobs where the postholder was able to work 20% of their normal working hours, has been removed.
The Job Retentions Scheme, or furlough scheme, has been extended again and will now run until 30 April 2021. It has also been confirmed that the Government will continue to pay an 80% contribution rate up until the end of April.
The Job Retention Bonus. that would have been paid to employers for each person who had been furloughed but who was still employed on 31 January 2021 and had met certain earnings criteria between November and January, has also been removed.
Job Retention Scheme - 1 November 2020 - 30 April 2021
The revised scheme follows the flexible furough scheme that was introduced to support the gradual reopening of businesses after the first national lockdown. The Public Sector is not expected to make use of the scheme where it continues to be in receipt of public funds for the posts in question. However, where clear evidence is available to demonstrate that salaries are funded from income generation activity, e.g. theatre, leisure centres, councils may access the JRS.
- Employees will be able to work for any portion of their normal working hours and be paid at their normal contractual rate for those hours.
- The Government will fund, through the JRS, 80% of the pay for the non-worked element of the employee’s normal working hours. It has been confirmed that this contribution rate will continue until the end of April 2021.
- The employer CAN top up to full pay for non-worked hours and must pay employer NICs and pension contributions.
- The employee does not need to have been furloughed previously but must be on PAYE on or before 30 October 2020 and appear on an RTI to HMRC between 20 March and 30 October 2020.
- You must have written agreement from the employee that they are to be furloughed especially if the employer will not be topping up to full pay.
- Working hours can be set on a seven day basis, allowing greater flexibility as demand fluctuates and to accomodate movement between Tier restrictions.
- The furlough funding cannot be claimed for any employee working a period of notice. This includes notice periods following a resignation, conduct or capbiblity dismissal as well as redundancy.
- Employees may volunteer for another organisation.
- Employees may undertake training while on furlough, but must receive at least minimum wage for any hours during which they are training.
- Trade Union Reps can undertake their duties and activities for the purpose of individual or collective representation of employees or other workers, but they must not provide services to or generate revenue for their employer.
- Agency workers can be furloughed but as they are employees of the agency, it will be for the agency to submit claims in relation to these workers.
- Casual workers can be furloughed and claims submitted in relation to their ‘usual working hours’ which would normally be based on the pre-19 March working pattern. However, where work is offered, including offers of redeployment, but is turned down, this brings to an end the duty to pay the casual worker.
- There are strict deadlines for submitting furlough funding claims. These must be submitted within 14 days of the end of the claim period, e.g. 14th of each month.
The scheme will remain in place until 30 April 2021. The Government will set out its plans for beyond this date in the Budget which will be announced on 3 March 2021.
Q & As
What are 'usual working hours'
The first point of call will be to consider what is in the contract of employment. However, where hours are variable then an average working week should be calculated.
Given that very few people have worked ‘normally’ since 20 March 2020, ‘usual working hours’ should normally be based on a working pattern before then.
What rate of pay should we use?
In most cases you will use the same calculation as was used to determine furlough pay during the first lockdown. This means that it will be based on the rate of pay due in March 2020 or in the 2019/20 tax year.
Can we furlough employees who are not able to work because they now have children at home?
The Government guidance on furlough has not changed as a result of this lockdown. Public Sector employers who are in receipt of public funding for salary costs are expected to not submit claims for furlough pay.
We are aware that the guidance does make reference to employers being able to furlough staff who are unable to work due to caring responsibilities or who are unable to work because they are Clinically Extremely Vulnerable or Clinically Vulnerable and the workplace not being COVID secure. Some councils across England have furloughed employees on this basis.
It is our opinion that the overriding factor should be the funding source for salary payments. Where the funding source is income generation e.g. theatres or leisure centres there is a clear argument for being able to furlough employees working in these areas. There is a growing argument that where employers are having to engage workers to cover the work of someone who cannot work, either because they are CEV and cannot work from home or because they have childcare responsibilities, that the public funding for the post is diverted to the cover worker. This means that the substantive post holder is not funded from the normal council public funding. However, councils are being given additional public funds to enable them fund the COVID19 response so it could be argued that the cover worker is paid from this pot and the substantive post holder funded from the normal public funding. We are aware that the COVID19 response funding is insufficient to plug the funding gap for most councils which may enable employers to successfully argue that the substantive post holder is not publicly funded and enable furlough funding to be claimed.
Unfortunately, there is no clear, definitive answer and each employer will need to consider their own circumstances and what evidence they would be able to provide to HMRC should they seek it.
HMRC continue to reserve the right to retrospectively investigate any claims submitted under the furlough scheme. Where they deem claims to have been made fraudulently they will take action against the employer. If they deem the claim was submitted erroneously but in good faith, they are likely to simply require repayment of the funds paid to the employer, but they may keep a closer eye on the employer over the coming years.