Chancellor Rishi Sunak has announced the extension of the Coronavirus Job Retention Scheme (CJRS) which will see the furlough scheme extended until the end of September 2021. The furlough scheme was due to stop at the end of April 2021. The Budget announcement about the extension itself was expected, but the length of the extension is a pleasant surprise.
Coronavirus Job Retention Scheme Background
As a result of the economic impact of the COVID-19 pandemic, the government introduced the Coronavirus Job Retention Scheme (CJRS). The CJRS was intended for companies to avoid redundancies by alleviating the pressure on the employer to continue paying wages of employees during the pandemic.
The CJRS was originally planned to end on 31 October 2020 and was originally set to be replaced with the Job Support Scheme (JSS) which was due to launch on 1 November 2020. However, in an eleventh-hour change of plan on 31 October 2020 the Prime Minister announced that the CJRS was to be extended in order to continue providing support to businesses and employees in what was deemed a necessity during the anticipated second national lockdown. The announcement unfortunately came too late to protect many “at risk” jobs and this time round the government have changed their approach by making a much earlier announcement to extend furlough, in order to limit the loss of job roles and the rise of unemployment.
On the 3rd March 2021, the Chancellor Rishi Sunak announced the further extension of the CJRS until the end of September 2021. This comes as a positive step following the Prime Minister’s “roadmap to reopening” leading up to the 21st June 2021. The “roadmap to reopening” plan is to take the UK out of lockdown in a cautious approach by slowly easing restrictions, in the hope of a movement towards “normality” as the vaccine is being rolled out across the country.
Furlough Scheme Extension
The rules of the CJRS/furlough extension will remain largely unchanged from its previous iterations. This means both full-time furloughing as well as flexible furloughing continue to be permitted, as at present, until 30 September. However, the scheme will be subject to a return of last summer’s reducing provisions, with employers required to contribute 10% in July and 20% in both August and September towards the hours their staff do not work, as well as employer National Insurance and pension contributions.
| Month | Government’s contribution to wages | Employer’s contribution to wages (excluding NIC and pension contributions) | Employer to meet NIC and pension contributions | Part-time return to work an option under the Scheme |
| March –June 2021 | 80% | 0% with the option to top up to 100% | Yes | Yes |
| July 2021 | 70% | 10% with the option to top up to 100% | Yes | Yes |
| August – September 2021 | 60% | 20% with the option to top up to 100% | Yes | Yes |
This extension of the scheme will give employers further time to plan, in the hope and expectation that the impact of the vaccine programme and subsequent lockdown easing will allow them to trade towards a more “normal” level with the hope of keeping employees in jobs. An alternative approach would have been for the government to target the support to specific industries hardest hit by the pandemic, such as hospitality, but clearly this wider support will give more breathing space not just to those industries but all to employers and their staff who continue to face challenges during this uncertain period.
Furlough Fraud
According to the most recent figures, since March 2020, 11.2 million jobs have been supported by the furlough scheme and there are approximately 4.7 million people currently on furlough leave. 4 out of 10 employers are currently utilising the scheme and it is no surprise that the hospitality industry has had the highest number of employees on furlough leave. However, there has been longstanding concern within the government about furlough fraud. HMRC says that over 1,900 reports have been made to its appropriate fraud hotline and the first arrests for furlough fraud have already started. Furlough fraud is described by the charity Protect as the fastest emerging issue it has dealt with in its history. Key fraudulent activity includes organisations telling furloughed staff to continue to work or claiming for working members of staff without their knowledge. As the CJRS Scheme nears its conclusion the government has attempted to have better transparency and created Employer Claim Data to deter fraudulent activity.
Conclusion
The provisions of the furlough scheme extension are extensions of the original CJRS scheme and remain largely unchanged. As a result, while employees are furloughed, they cannot do any work for their employer that makes money or provides services for the organisation or associated organisation, but they can take part in training or volunteering. Employees retain their employment rights such as the rights to holiday, annual leave, family friendly rights, redundancy payments, full contractual notice payments and the right not to be unfairly dismissed.
How we can help
We offer specialist advice relating to the CJRS/Furlough Scheme, for both employees and employers. We can also advise on areas including workforce restructuring and redundancies, unfair dismissal claims and any other aspect of employment law.
We have Solicitors offices in Southampton, Hedge End, Chandlers Ford, Winchester, Lymington and Richmond-Upon-Thames.
About the author:
Harinder Sangha is a Senior Solicitor in Eric Robinson’s Employment Department. Harinder is driven to find the best solution for his clients through the provision of practical, commercially minded advice. Harinder acts for companies and individuals (whether as complainant or respondent) in relation to a wide range of employment issues. Harinder can be contacted by email: harinder.sangha@ericrobinson.co.uk
