2.11.2020
On 31 October, the Prime Minister announced a four week lockdown in England to take effect from 5 November, to try to bring the Covid-19 transmission rate back down. To support businesses to protect jobs during this period, the Coronavirus Job Retention Scheme (which was due to end on 31 October) is being extended until December. The Job Support Scheme that was due to replace it from 1 November is therefore being postponed. Below, we set out what we know so far and discuss the implications for employers.
Four week lockdown in England
In the face of rising Covid-19 transmission rates, the Government has announced a new lockdown in England. From 5 November until 2 December, people are once again being required to stay at home and to avoid meeting with people they do not live with, except for specific limited purposes, and certain businesses (including non-essential retail, leisure, hospitality and close contact services) are being required to close. Police and other relevant authorities will have powers to enforce these restrictions.
As in the first lockdown earlier this year, one of the permitted purposes for which people can leave home is to go to work, where their workplace remains open and they cannot work from home. When announcing the new lockdown measures, the Prime Minister specifically highlighted manufacturing as one sector in which people may be unable to work from home and should therefore continue to attend work. Manufacturers will, of course, need to facilitate working from home for those employees whose jobs can be done remotely, and ensure that they continue to follow the guidance on keeping the workplace Covid-secure for those employees who must attend the workplace. However, the available guidance on the applicable lockdown measures notes that those who are clinically extremely vulnerable to Covid-19 – although not required to shield in quite such an extreme way as they were in the first lockdown – should not go to work. Accordingly, if they cannot work from home, they may be entitled to SSP. Further guidance for shielders is due to be published shortly.
(Note that the new lockdown measures are set to apply in England only, with the devolved nations continuing to apply their own measures. Wales is in the middle of a ‘firebreak’ lockdown, which is currently due to end on 9 November. Scotland has introduced a five tier system applying different levels of restrictions in different local areas depending on the transmission rate in those areas. Northern Ireland is currently operating with strict restrictions until 13 November).
Furlough extension and JSS delay
As highlighted above, the Coronavirus Job Retention Scheme (the ‘CJRS’, or ‘furlough scheme’) was due to come to an end on 31 October. It was set to be replaced with a new Job Support Scheme from 1 November, with different iterations for businesses that remain open and those required to close (referred to as ‘JSS Open’ and ‘JSS Closed’) but both were less generous than the furlough scheme.
However, in light of the potential impact of the new lockdown measures on businesses, the Government has decided to postpone the implementation of the JSS Open and JSS Closed, instead extending the furlough scheme for a further month. The JSS Open and JSS Closed will come into effect when furlough ends.
Employees who are fully furloughed will be entitled to 80% of their salary, up to a cap of £2,500 per month. Those who are flexibly furloughed must receive full pay for their working hours and will be entitled to 80% of their salary for their non-working hours, up to the relevant cap (the £2,500 is pro-rated based on the hours worked). Under this lockdown extension, the Government has committed to funding the full 80% of employees’ pay (up to the applicable cap), with employers having to cover only the National Insurance and employer pension contributions. This is actually more generous for employers than the CJRS was in its final months, as the level of Government support had tapered down to 60% by October, with employers having had to fund the additional 20% of employees’ pay.
It is also worth noting the broader eligibility conditions that apply to the lockdown extension to the furlough scheme. Previously, employees had to have been furloughed for at least a 3 week period between 1 March and 30 June 2020 in order to be eligible for furlough after 1 July 2020. Under the lockdown extension, by contrast, employees will be eligible provided they were on the employer's PAYE payroll by 23.59 on 30 October 2020 (and an RTI submission had been made in respect of them by that time). The guidance that is currently available does not impose any requirement for an employee to have been furloughed in the past.
What if you had already sought to put JSS arrangements in place with employees?
Some employers may well have already written to their employees to put in place arrangements for them to move onto the JSS Open in anticipation of the start of that scheme. If you have done this, we recommend that you contact affected employees as soon as possible to explain that the Government has announced a last-minute extension to the furlough scheme and postponement of the JSS Open and to seek the employees’ agreement to furlough instead. We have set out below some brief wording that you could use for these urgent communications, based on the limited guidance that is currently available. You may need to tailor this to suit your own situation. Note too that this wording assumes that where an employee was on full or flexible furlough last week, you will be reinstating those arrangements. If you are instead wanting to move an employee who was on full furlough onto flexible furlough or vice versa, then you will need to amend the wording accordingly. It also assumes that if you had offered JSS to employees who were not on furlough last week (i.e. who were working normally), and you now wish to put them on furlough, that will be flexible furlough rather than full furlough.
Urgent communications wording:
You may be aware that, as part of its announcement of new lockdown measures in England, the Government has decided at the last minute to extend the furlough scheme until December and delay the start of the Job Support Scheme for businesses that remain open (the JSS Open) until this lockdown extension of furlough comes to an end.
[If employee had been on full or flexible furlough last week but had already confirmed their agreement to JSS Open working arrangements: We very much appreciate your agreement to enter into the JSS Open working arrangements that we had proposed to you in our letter of [date]. However, in view of the postponement of the JSS Open and extension of the furlough scheme, we now need to ask that you agree to return to[flexible] furlough instead. This will be on the same terms as your previous period of [flexible] furlough, as set out in the furlough letter of [date] [save that your working hours will be those that we had agreed with you under the JSS Open]. You will benefit from this as furlough pay is at the higher rate of 80% of your salary for non-worked hours (subject to the applicable cap) whereas JSS Open pay would have been 66.67% of your salary for non-worked hours (also subject to a cap). We currently anticipate that this furlough arrangement will run until December, but will keep you informed of any developments. Please reply to [name, contact details] to confirm your agreement to this furlough arrangement.]
[If employee had been on full or flexible furlough last week but had not yet confirmed their agreement to JSS Open working arrangements: Although we had sought your agreement to move onto the JSS Open from [date], in view of the postponement of the JSS Open and extension of the furlough scheme, we now need to ask that you agree to remain on [flexible] furlough instead. This furlough arrangement will be on the same terms as your previous period of [flexible] furlough, as set out in the furlough letter of [date] [save that your working hours will be those that we had proposed to you under the JSS Open]. You will benefit from this as furlough pay is at the higher rate of 80% of your salary for non-worked hours (subject to the applicable cap) whereas JSS Open pay would have been 66.67% of your salary for non-worked hours (also subject to a cap). We currently anticipate that this furlough arrangement will run until December, but will keep you informed of any developments. Please reply to [name, contact details] to confirm your agreement to this furlough arrangement.]
[If employee has not been on furlough (i.e. has been working normally) and has not yet confirmed their agreement to JSS Open working arrangements: Although we had sought your agreement to go onto reduced hours under the JSS Open from [date], in view of the postponement of the JSS Open and extension of the furlough scheme, we now need to ask that you agree to be furloughed instead. This furlough arrangement will be on the working hours that we had proposed to you under the JSS Open, but with furlough pay rather than JSS Open pay. You will benefit from this as furlough pay is at the higher rate of 80% of your salary for non-worked hours (subject to the applicable cap) whereas JSS Open pay would have been 66.67% of your salary for non-worked hours (also subject to a cap). Further details are set out in the enclosed letter. We currently anticipate that this furlough arrangement will run until December, but will keep you informed of any developments. We should be grateful if you could, please, reply to [name, contact details] to confirm your agreement to this furlough arrangement.]
[If employee has not been on furlough (i.e. has been working normally) but has confirmed their agreement to JSS Open working arrangements: We very much appreciate your agreement to enter into the JSS Open working arrangements that we had proposed to you in our letter of [date]. However, in view of the postponement of the JSS Open and extension of the furlough scheme, we now need to ask that you agree to be furloughed instead. This furlough arrangement will be on the working hours that we had agreed with you under the JSS Open, but with furlough pay rather than JSS Open pay. You will benefit from this as furlough pay is at the higher rate of 80% of your salary for non-worked hours (subject to the applicable cap) whereas JSS Open pay would have been 66.67% of your salary for non-worked hours (also subject to a cap). Further details are set out in the enclosed letter. We currently anticipate that this furlough arrangement will run until December, but will keep you informed of any developments. We should be grateful if you could, please, reply to [name, contact details] to confirm your agreement to this furlough arrangement.]
How else we can help
We are in the process of revising our original template furlough letters to enable employers to place employees on furlough during the lockdown extension to the furlough scheme. These will be made available on our website as soon as possible.
We understand that further guidance on the lockdown extension to the furlough scheme will be published shortly and we will update our Coronavirus FAQs to provide information on this and on the broader implications for employers of the new lockdown in England.
In the meantime, if you are a Make UK member, please contact your adviser with any queries you wish to discuss. Alternatively, non-members are welcome to call us on 0808 168 5874, or email [email protected].