As many as 200,000 more UK workers will now be eligible to get support through the Coronavirus Job Retention Scheme (CJRS) after the date for eligibility was extended to 19 March 2020.
CJRS enables firms affected by coronavirus to put employees on furlough, equivalent to a leave of absence. This means that while they can’t work, the government will provide 80% of their salary, up to £2,500 per month. Employers can choose to top this up to 100%, although not required to.
The aim is to help employers retain their workforce while protecting the UK economy.
Risk of permanent redundancies
The government’s decision to extend the cut-off date (published 15th April 2020) comes after calls from the Confederation of British Industry (CBI) to extend furlough or risk permanent redundancies.
The CBI warned that if companies were to comply with the minimum 45-day consultation period required for redundancies of over 100 employees, they would have to start procedures this Saturday, 18 April.
Up until now, the government had only confirmed that its furlough scheme would run for three months until 31st May 2020.
When CJRS was first unveiled last month, workers had to be employed by the company furloughing them on 28 February 2020. However, the government has now extended the eligibility date to 19 March 2020, the day before the scheme was first announced.
Employers can claim for furloughed employees they employed on their PAYE payroll and for whom they have made an RTI submission on or before 19 March 2020. However, while the cut-off date for furloughing employees has been extended, if an employer is looking to rehire a former employee so they can furlough them, the cut-off date remains 28 February 2020. Therefore, the worker will need to have been on the payroll at that time. This point needs to be explored properly, so please ensure that you take advice prior to making any decisions.
Whether your new starters are eligible
Employers are questioning whether their new starters in March can now be furloughed. Noting that there is still no obligation to do this, the extension date to 19th March 2020 will only affect new starters who previously weren’t eligible for furlough because they started after 28th February 2020 and who were paid between 1st and 19th March 2020. Therefore, if you run a weekly or fortnightly payroll you may have some new starters who fall into this category. Similarly if you run a monthly payroll and your pay date falls between the 1st and 19th of the month, there may be more new starters in March 2020 eligible to be designated as furloughed employees if you wish to follow this process, in line with the latest government guidance.
Firms want clarity
The CBI says that businesses need to be able to plan and that they are being forced into making huge decisions that will affect people’s livelihoods. They stressed that clarity of a 45 day notice period is vital.
Employers who make between 20 and 99 people redundant must follow a consultation period of at least 30 days.
A Treasury spokesperson responded by saying that it hopes conditions will improve sufficiently over the initial three-month period, adding that the chancellor will review extending it for longer if deemed necessary.
This comes just as the Office for Budget Responsibility (OBR) warns that unemployment in the UK could hit 10% by the end of June, equivalent to more than 2 million people without jobs.
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For information and advice relating to coronavirus visit our Coronavirus Advice and Guidance for Employers section.