Professional December 2020 - January 2021

REWARD

The extended job retention scheme

Danny Done, managing director at Portfolio Payroll , outlines the details

T he government has announced that the job retention scheme (JRS), which began in March 2020 and involves designating some or all employees as ‘furloughed workers’, will be extended until March 2021. ‘Furloughing’ means temporarily changing an employee’s status of employment so that they do not do any work at all, or work for fewer hours than normal, but are retained by their employer. It is an alternative to making employees redundant which may otherwise be required due to having no, or little, work to offer the current workforce. The JRS was scheduled to come to an end on 31 October 2020, but it will now be extended for all UK nations. This means that the job support scheme, which was meant to begin on 1 November, will no longer be coming into force until further notice, if at all. The extended JRS will return to its original structure of covering 80% of furloughed employees’ wages for any unworked hours within an employee’s usual working hours, to a maximum of £2,500 per employee per month. This level of grant will be reviewed at the end of January 2021 and grant levels may change. Full and flexible furlough will both still be running within the JRS. When an employee is on full furlough, no wage contribution is needed from the employer except for pension and National Insurance contributions. Flexible furlough rules mean that employers pay staff for the hours they work and can claim 80% of wage costs for unworked hours to a maximum which

is proportionately reduced in accordance with the number of unworked hours. In both cases, employers can choose to top up pay to the amount the employee would normally receive. Both employers and employees must be eligible for the scheme for claims to be successful. All employers with a UK bank account and UK PAYE (pay as you earn) scheme can claim the grant whether their business is open or closed due to lockdown restrictions of any kind. However, the government expects that publicly funded organisations will not use the JRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. The same rules have applied to use of the JRS since it began. Importantly, employers do not need to have used furlough before in order to use the extended scheme and, similarly, employees do not have to have been furloughed before to also be eligible. For employees to be eligible to have their wages claimed for under this extension, they must be on an 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 HM Revenue & Customs must have been made between 20 March 2020 and 30 October 2020. Since it was announced that the furlough scheme was to be extended until the end of March 2021, attention turned to the government in anticipation of further guidance on usage of the scheme. This was released on 10 November 2020 with much similarity to the way the

scheme has always functioned. However, despite the increase in flexibility that the extended scheme provides when compared to its original incarnation, further restrictions on its usage that were not previously seen have been introduced, likely to keep its ongoing cost down. The government has confirmed that the same rules on annual leave apply to the extension as it did during the original scheme, including the requirement to top up pay – for example, an employee who takes annual leave whilst on furlough will need to be paid their normal rate of pay rather than their furlough rate. Another major point to consider is that employers can also furlough employees transferred under TUPE (transfer of undertaking protection of employment) or PAYE business succession rules subject to certain conditions; as before, it seems that this will depend on when the transfer took place. Furthermore, if an employee decides to end her maternity leave early, so that she can be furloughed, she must give her employer at least eight weeks’ notice of her return to work, meaning that her employer will not be able to furlough her until the end of the eight- week period. Notably, in a significant change to the previous position, the government reviewed whether employers can claim from the JRS for employees serving their notice period – see https:// bit.ly/339cPPN for the limitation from 1 December. It is essential that employers familiarise themselves with this guidance as much as possible and regularly check it for updates. It should be remembered that the JRS has seen numerous amendments since it was originally implemented, a trend that seems likely to continue over the next few months. n

...similarly, employees do not have to have been furloughed before to also be eligible.

| Professional in Payroll, Pensions and Reward | December 2020 - January 2021 | Issue 66 38

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