Breaking News: Second national lockdown & extension of coronavirus job retention scheme
On Saturday 31 October 2020, Prime Minister Boris Johnson announced a second 'national' lockdown (applicable to England only), which will be effective from Thursday 5 November 2020 to Wednesday 2 December 2020 inclusive. Whilst the Prime Minister's plans have yet to be set out to, and passed by, Parliament, it is overwhelmingly likely that the restrictions will come into force as planned on Thursday.
New Restricitons: At a glance
- Everyone must stay at home, and only leave home for the following specific reasons:
- For education;
- For work, if your job cannot be carried out from home;
- For exercise and recreation outdoors only, either on your own, with your household or with one other person from another household;
- For medical reasons, including pre-arranged medical appointments;
- To escape injury or harm (such as fleeing from domestic violence);
- To shop for food and essentials; and
- To provide care for vulnerable people.
- Single adult households can form exclusive support bubbles with one other household.
- Children with parents who are separated will continue to be able to move between homes.
- There is no reintroduction of the shielding programme, but those individuals who are clinically vulnerable, or over the age of 60, should pay particular adherence to the rules and minimise contact with others. For those who are clinically extremely vulnerable, they should do the same, but should also not go to work if they are unable to carry out their duties from home.
Businesses & other organisations
- The following businesses and organisations will need to close:
- Non-essential shops, leisure and entertainment venues except for "click & collect" services;
- Pubs, bars and restaurants except for takeaway and delivery services.
- Workplaces in the construction and manufacturing sectors can remain open, in respect of those roles which cannot be carried out from home.
- Educational establishments will remain open, including 'early years' settings, schools, colleges and universities.
- The Coronavirus Job Retention Scheme ('CJRS') (otherwise known as 'furlough'), which was due to come to a close at the end of October 2020, will be extended for the duration of the national lockdown, until December 2020.
The return of Furlough
At a glance
For the time being, and at least until the national lockdown has been lifted, and England has returned to the previous three tier system, the Job Support Scheme ('JSS', which was due to come into force on 1 November 2020) has been put on hold.
Instead, the CJRS will continue until December 2020, and will be more generous than either of the (now postponed) JSS Open and JSS Closed. The precise end date has not yet been made clear, but we assume that it will remain in force until the lockdown ends on 2 December 2020. It is important to note that, whilst this second national lockdown applies to England only, the extension of the CJRS will also apply to all the devolved administrations.
The following rules will apply:
- From 1 November 2020, the CJRS will revert to the rules which were in force during August 2020. That is, the Government will contribute the full 80% of pay for hours not worked (up to the maximum of £2500), and employers will be responsible for employer National Insurance Contributions and minimum pension contributions only.
- The CJRS will continue to operate in the way that it has done previously, with businesses being paid upfront to cover wage costs. However, there will be a short period (as yet unspecified) during which the Government will need to change the legal terms of the scheme and update the claim portal and, as a result, businesses will be paid in arrears for that period.
- Flexible furlough will continue to be permitted, in addition to full-time furlough.
☑ must have a UK bank account and UK PAYE scheme.
☒ NO need to have previously used the CJRS.
☑ should be a privately funded business (although partially publicly funded organisations may be eligible where their private revenues have been disrupted).
☑ must be on their employer's PAYE payroll by 23:59 on 30 October 2020 (this means that a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020).
☑ can be employed on any type of contract.
This means that there will be many employees who, due to their employment start date, were previously ineligible for furlough, but who will now be caught by the new scheme and will be entitled to support from the Government.
- Employers can claim the grant for the hours which their employees are not working, calculated by reference to their usual hours worked in a claim period. Although we are awaiting more detail, it has been indicated that such calculations will broadly follow the same methodology as is currently in force under the CJRS.
- When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
- The Government is due to confirm the opening date for claims in respect of employee wage costs during November 2020. However, this extension to the CJRS is intended to provide seamless support from the end of the existing CJRS, and there will be no hiatus in Government funding.
What we don't know yet
- Presumably, those employees who have been given notice of redundancy, but have not yet left employment with their employer, could have their employment extended in order that they can take advantage of the extended CJRS. Many employers will have taken steps to confirm redundancies ahead of the intended closure of the CJRS at the end of October 2020. However, no explicit guidance on this point has been published to date.
- There is no indication as to whether those employees who have already been made redundant in recent days or weeks could be re-employed and placed on furlough. This was a feature of previous incarnations of the CJRS.
Further guidance has been promised in the coming days, and it is likely that a Treasury Direction will follow. We will update you as and when these are published.
Action for Employers
Ahead of the new working week, many employers will have already entered into agreements with their employees in respect of the JSS Open and JSS Closed. Given that the position has changed quite dramatically over the weekend, and the JSS has been withdrawn for the time being, employers will need to issue urgent communications to their employees as to what they intend to do going forwards. This may be to ask for agreement to change from the JSS to the extended CJRS or, given the circumstances arising from this new lockdown, to place employees on furlough who have not previously entered into an agreement to amend hours. As details surrounding the extended CJRS are currently rather limited, employers may need to send headline communications to employees for the time being, and provide further information once additional guidance has been published.
This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact James Baker or Rachael Lloyd to discuss any issues you are facing.