The Chancellor announced yesterday that the furlough scheme has been extended until the end of April 2021, with the government continuing to pay 80% of employees’ wages. The extension is intended to provide certainty for businesses ahead of the Chancellor’s budget.
In this article we summarise the rules under the scheme, the impact this extension will have on businesses and the other financial support options available to them, and where you can find further advice and support for your business.
What has changed for employers following this extension of the CJRS?
The Coronavirus Job Retention Scheme (CJRS) had previously been extended until 31 March 2021, with government contributions to wages fixed at 80% until January and then set to decrease.
This latest announcement confirms that government contributions will remain at 80% until the end of April 2021 when the furlough scheme is currently planned to come to an end.
This means that employers will receive a grant for up to 80% of their employees current salary for hours not worked up to a capped amount of £2,500 per month.
The CJRS remains open to all employers with a UK bank account and UK PAYE scheme, small or large, charitable or non-profit and the scheme rules remain the same.
What costs will employers incur under the extended scheme?
For hours worked, employers will only be required to pay wages, National Insurance Contributions (NICS) and pension contributions for hours worked.
For hours not worked by their employees, employers will need to pay NICS and pension contributions.
As with the previous extension of the CJRS, employers are still able to top up employee wages above the scheme grant of 80% at their own expense if they wish.
Will the extended scheme allow flexible furlough?
The CJRS will continue to offer flexible furlough options to businesses that need to furlough employees.
This means that employers will be able to use the scheme for any amount of time and shift pattern, for both part-time or full time furloughing of employees.
Have any of the scheme rules changed?
No, yesterday’s announcement confirmed that the CJRS rules remain the same.
There is more information about particular CJRS rules such as how employers can use the scheme whilst going through a redundancy or other termination process, for employees who are off sick, and other essential tips for navigating the CJRS in our previous articles.
Will there still be a review of the scheme in January 2021?
No, the planned review of the CJRS which was due to take place in January 2021 has effectively been brought forward, and the Chancellor’s latest announcement confirms that the CJRS will remain the same until April 2021.
What impact does this have on the Job Support Scheme?
The previously announced Job Support Scheme has been postponed due to the extension of the CJRS. All guidance on the Job Support Scheme has currently been withdrawn and it is expected that this scheme will open when the CJRS ends, as previously planned.
Have there been changes to any other financial support schemes?
Loan schemes which were due to close in January 2021, including the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and the Coronavirus Large Business Interruption Loan Scheme, will now be extended until the end of March 2021, providing eligible businesses with an additional two months to access the loans.
Where can I find further advice and support?
Should you require any assistance with your employment arrangements during the Covid-19 pandemic, please do not hesitate to contact the co-head partners of our employment department. Ewan Keen can be reached at 020 3206 2724 or Ewan.Keen@smab.co.uk or Tamara Ludlow can be reached at 020 3206 2739 or Tamara.Ludlow@smab.co.uk.