Lucy Lewis: What the extension of the furlough scheme means for employers

Lucy Lewis: Extension of the furlough scheme

The Coronavirus Job Retention Scheme (CJRS) had been expected to end on 31 October 2020, but Boris Johnson, UK prime minister, announced the very same day that it would be extended until December 2020 in light of new lockdown measures introduced in England.

The CJRS aims to keep people in work during the economic turbulence caused by Covid-19 (Coronavirus) through a government subsidy of wages. The scheme has slowly been winding down since August, with employers having to contribute more themselves. But now the government subsidy will return to its most generous level, with organisations able to claim 80% of employees’ salaries, up to £2,500 per month. Employers will still have to cover national insurance (NI) and pension contributions. There is also the option of bringing back employees to work part time and receive a furlough grant for the hours unworked.

The exact date that the CJRS will expire this time around is unclear, but it is likely to coincide with the end of the lockdown restrictions in England, which are currently due to be lifted on 2 December. The successor to furlough, known as the Job Support Scheme (JSS), has now been delayed and is expected to launch whenever the furlough extension ends.

Many organisations have already put in place JSS agreements in anticipation of it launching on 1 November. Employers should contact impacted staff as soon as possible to explain that the government has made a decision to extend the furlough scheme, and ask them to agree to continue on furlough instead.

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At the time of writing, there are still some unanswered questions, such as whether employers can rehire employees who were made redundant in anticipation of the furlough scheme ending. It is also unclear how the furlough extension will interact with the Job Retention bonus, where employers are rewarded for keeping formerly furloughed staff in employment. Consequently, it is important for organisations to keep a close eye on all the latest information from the government as the details are released in the coming days.

Lucy Lewis is partner in the employment team at law firm Lewis Silkin.