Employers await clarity on furlough extension

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Employers are still waiting for clarity on a number of aspects of the furlough scheme after it was extended until 2 December.

MPs are due to vote today on the planned month-long lockdown in England, and restrictions will come into force after midnight if approved.

However, official guidance and the all-important Treasury Direction on the extension to the furlough scheme is still to be published and some questions remain unanswered.

One of the key questions is whether the government will commit to offering the Job Retention Scheme to all parts of the UK, and potentially past the 2 December closing date if there are further regional or national lockdowns.

Reports suggest that while Prime Minister Boris Johnson has indicated furlough support of 80% of employees’ wages will be available to all parts of the UK, the Treasury is yet to commit to this and confirm this will be the case to First Ministers of Scotland and Wales, Nicola Sturgeon and Mark Drakeford.

Niki Southern, employment partner at Kingsley Napley, said there was yet to be confirmation but it was likely furlough would be offered across all devolved nations.

“Given the scheme which was intended to follow the CJRS, the Job Support Scheme, has been postponed pending the end of the CJRS, it seems likely that whether or not the devolved nations lock down to the same extent as England, the CJRS scheme will continue to be available in Wales, Scotland and Northern Ireland,” she said.

One thing the government has confirmed is that the Job Support Scheme (JSS), which was due to come into force on 1 November, will be postponed until this round of furlough ends.

“The government has indicated that the Job Support Scheme will be postponed until the Job Retention Scheme ends, which is currently scheduled for 2nd December 2020,” explained Louise Myers, founder and managing partner of law firm CG Professional.

What is unclear, however, is whether employers will be able to claim the Job Retention Bonus – a scheme announced in July whereby employers can claim a £1,000 bonus for each employee they brought back from furlough and continued to employ until the end of January.

Southern adds: “The government’s statement so far has also been silent on the job retention bonus. This is presumably because the CJRS extension will only last until December, so the principle of encouraging employers to retain employees beyond then still stands.”

When the JSS was due to begin last weekend, employers had prepared for the new scheme but were told hours before it was due to open that furlough would be extended instead.

The latest developments mean “a lot of further disruption” for employers, argued Louise Skinner, an employment partner at Morgan Lewis.

“Many employees had been returned from furlough, moved onto part-time contracts, and considerable pay-roll adjustments were made to meet the requirements of the new JSS – those arrangements will need to be paused or unravelled to allow employers to benefit from the extended CJRS instead,” she said.

A key consideration will be how employers handle ongoing redundancy consultations, she added.

“It is also the case that some employers made redundancies as a direct result of the furlough scheme coming to an end, and employees will no doubt argue that they should be permitted to stay on the books on furlough leave, or even be re-employed to allow them to benefit from furlough where the redundancy had taken effect within a few weeks in advance of the extension.”

HM Revenue and Customs has confirmed that employers will be able to re-employ any employee who was on their payroll from 23 September and they can still qualify for furlough, even if they were made redundant or their employment ended after 23 September. This is similar to the options available in April when the scheme first began.

Until the formal guidance appears, some questions will still remain, however.

“There is not yet detailed guidance available on the CJRS extension, and no related Treasury Direction, but inevitably clarification will be needed from the government quickly given the size and sudden nature of the U-turn,” added Skinner.