The Chancellor, Rishi Sunak has announced that the Coronavirus Job Retention Scheme (CJRS) will be extended until 31 March 2021.

This extension reflects evidence that the economic effects of lockdown for businesses are much longer lasting than the duration of any national or local restrictions imposed. The Job Support Scheme (JSS) that was due to commence on 1 November 2020 will be postponed or even reconsidered until the CJRS is finished.

The extended CJRS will be greatly received by many employees and employers alike. Throughout September and October 2020, employers were required to contribute towards any claim made for any employees, paying 10% an 20% of wages in each respective month for any hours unworked by their employees.

The extended CJRS, from 1 November will see the Government contribute 80% of an employee’s wages (subject to a maximum of £2,500) whilst the employer will only pay for National Insurance and pension contributions. This mirrors how the scheme operated in August 2020. The Government are looking to review the scheme in January 2021.

The CJRS, whilst being an extension, will be acting as a new scheme. This means that any employee who was not previously furloughed between March and June 2020 will now be eligible to be placed on furlough leave. The employee must have been employed and on payroll before 30 October 2020 and the employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March and 30 October 2020.

From June 2020, employees have been able to return to work whilst still being on furlough leave. The Government has announced under the extended scheme employees can still work whilst on flexible furlough. As previously, the employer will pay for any hours worked whilst the Government will contribute up to 80% of any unworked hours.

Any agreement between the employer and employee to make use of the CJRS, whether flexible or full furlough, must be made in writing. Any employee that has already been placed on furlough leave after 1 November 2020 can have an agreement made retrospectively but the agreement must be made in writing on or before 13 November 2020. Thereafter, any agreement must be in writing before the employee is placed on furlough.

On a separate note, the Job Retention Bonus, a scheme to reward employers for not making their furloughed employees redundant, will now not be paid in February. It is unclear whether this will be paid once the CJRS has concluded or if the Scheme will change to something completely different to fall in line with procedures as that time. We will keep you updated.

Should you or your business need any advice or assistance with drafting a furlough agreement then please do not hesitate to get in touch with Sarah Collier, Partner & Head of Employment.