Furlough scheme extended in wake of second national lockdown

On Thursday 5 November 2020, as England’s four-week lockdown commenced, English Chancellor Rishi Sunak announced that the government would be extending the Coronavirus Job Retention Scheme (CJRS) until March 2021. Mr Sunak stated that the government’s priority remained the protection of people’s lives and livelihood – hence the five-month extension of the CJRS (or furlough scheme), which will apply to all four nations of the UK.

Will the extended scheme be any different?

Since August, a tapered version of the furlough scheme has been in place, requiring employers to cover an increasing percentage of furloughed employees’ wages as the initiative wound down to its close. Now, with England locked down for a second time, businesses will welcome the news that the extended scheme will once again cover 80% of wages until 31 January 2021; employers are only responsible for covering their National Insurance and workplace pension contributions. The initiative will be reviewed in January, to see whether the economy has sufficiently recovered to ask employers to begin contributing more in February.

Due to the extension of the furlough scheme, the £1,000 Job Retention Bonus will no longer be available in February 2021. Instead, an alternative retention incentive will be brought in at an appropriate time.

Who will be eligible?

Employers from all businesses, whether SMEs or large corporations, charities or non-profit organisations, are eligible for the extended scheme, as are employees on any kind of contract, including those on zero-hours or flexible arrangements, and agency workers. To qualify for the extended scheme, employees will need to have been on the company’s payroll since 30 October at the latest – although they don’t need to have been furloughed previously. Since July, employers have also been able to bring staff back part time and furlough them for the remaining hours – this is set to continue.

What other support is available?

Grants will also be available to support businesses through this difficult time, with the value calculated according to the rateable value of the business, as follows:

  • For properties with a rateable value of £15k or less, grants will be worth £1,334 per month, or £667 per fortnight.
  • For properties with a rateable value of between £15k and £51k, grants will be worth £2,000 per month, or £1,000 per fortnight.
  • For properties with a rateable value of £51k or over, grants will be worth £3,000 per month, or £1,500 per fortnight.

A fund of £1.1bn is also being made available for one-off payments to struggling businesses, to be paid out at the discretion of local authorities.

What if I’m self-employed?

Self-employed people have faced a real struggle throughout the pandemic; in recognition of this, the Chancellor has extended the funding available from the Self-Employed Income Support Scheme (SEISS). Two further grants are set to be offered, with the first covering the period between November 2020 to January 2021. The grant has been increased to cover 80% of average trading profits for this period, to be paid in a lump sum capped at £7,500. There will also be a grant to cover the February to April 2021 period, but it is not yet known what level of support will be available.

Supporting businesses and employees through unprecedented times

The past few months have been a whirlwind of change and uncertainty for businesses; a second lockdown has come as a severe blow to many businesses, and financial support measures are changing what seems like daily as the government races to keep up with developments. Our knowledgeable and sympathetic Employment lawyers are on hand to support both employers and their staff through the tough winter ahead. Don’t go it alone – contact employmentlaw@woodfines.co.uk for sound legal advice.

-Savanita Atwal 

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