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Emma O'Connor


A new month long lockdown for England has been announced from Thursday 5 November for England as well as an extension of the Job Retention Scheme (JRS#2) until March 2021, Emma O’Connor asks what does this new announcement from the Chancellor yesterday (5 November 2020) mean for employers and their employees?

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What do the new rules mean and who is eligible under JRS#2?

Although full guidance is expected on 10 November, a new policy statement has been published HERE.

Where the rules relating to JRS#2 do not change, we should revert back to the rules for JRS#1.

The extension to the JRS – JRS#2 - is due to commence from 1 November 2020 and last “until 31 March 2021”.

JRS#2 will apply to all employers across the UK, whether their businesses are open or closed, including charitable organisations, although there are restrictions, as before, on public sector employers’ ability to access the extended scheme. All employers must have a UK bank account and UK PAYE schemes to be able to claim the grant. 

As far as employees go, at present the HMRC statement says that to be eligible employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This would include those workers who were excluded from accessing the previous JRS scheme because their start date precluded their eligibility. For more details for what this means for employees who have been made recently redundant, see below.

Employees can be also be working on any type of contract, so would include workers on zero-hours contracts. Note, that the self-employed would not be covered by the JRS#2. Separate guidance and support for the self-employed has also been announced and extended.

Neither the employer nor the employee needs to have previously used the JRS. Potentially JRS#2 is open to a wider class of worker as they do not need to have been on a minimum consecutive period of furlough to access JRS#2 as we saw as at the 30 June cut-off previously for JRS#1.

Employers could choose to top up furlough pay if they wish.

The rules relating to holiday/accrual and holiday pay will remain as they did under JRS#1, so something to think about here. As well as this, existing legal rights to SSP, maternity and other parental rights, rights against unfair dismissal, equality laws, redundancy payments and the right to be paid at least statutory National Minimum Wage for hours worked (and when training) remain also.

What is the rate of JRS#2 support?

The support under the JRS#2 will revert to what it was in August 2020 with the government funding up to 80% of normal wages for hours not worked, capped at £2,500 a month. Employers will have to fund Employer NICs and basic pension contributions. The rates of JRS#2 will be reviewed in January 2021.

Employees must pay their usual income tax and NICs on the grant and any full pay if on flexible furlough.

What “wages” should employers use?

How wages are calculated for furlough purposes now will depend on whether an employee has been furloughed under JRS#1 or if this is their first time. Employees who have been furloughed previously, will continue to have their reference pay and hours based on the existing furlough calculations used under JRS#1. Nothing should change.

However, employees who have not been furloughed before will have their pay/hours calculated by reference to:

For fixed wages - 80% of the wages payable in the last pay period ending on or before 30 October 2020;

For those on variable pay – 80% of the average payable between (these dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their JRS#2 period begins.

What about hours?

As above, if the employee has previously been furloughed, their hours calculations will be based on what they were under JRS#1.

If an employee was not previously furloughed, then under JRS#1, where hours are fixed and whose pay does not vary, employers will use their contracted hours worked in the last pay period ending on or before 30 October 2020.

Where hours/pay varies and the employee has not been previously furloughed, then under JRS#2 employers will use the average of their usual hours worked between (these dates are inclusive) the start date of the 2020 to 2021 tax year, (for example, 6 April 2020) and the day before their furlough periods begins under JRS#2.

What about the Job Support Scheme?

The Job Support Scheme (open and closed), which was scheduled to come in on Sunday 1st November, has been postponed until the furlough scheme ends.

We should also add that the Job Retention Bonus has also been postponed (this was due to be paid at a rate of £1,000 per retained employee).

Flexible Furlough?

Under JRS#2, employers will have the option to furlough staff on a full time basis or retain staff on a flexible furlough basis, with the employer paying (in full) for hours worked and accessing the JRS#2 for hours not worked (subject to the cap on grants).

What about those currently on furlough, do we have to bring them back to work now and re-furlough them on 5 November?

The guidance issued on Saturday states that:

The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

This means that employees who are currently on JRS#1 will continue on JRS#2 without a break so there would be no need for employees to come back to work only to be re-furloughed, although employers are advised to notify employees of the change in writing and keep a record of their agreement (see below).

Those previously unfurloughed would start furlough under JRS#2 when notified.

What is the minimum furlough period?

7 consecutive days. This means that employees could be on full furlough for one week and flexible furlough the next, for example, or stay of furlough full time for a week – full weeks are the key.

What about furlough and employees who are shielding?

The new guidance states that, employees can be furloughed where they are unable to work because they either shielding in line with public health guidance (or need to stay at home with someone who is shielding) or if they have caring responsibilities resulting from coronavirus, including employees that need to look after children. Whilst JRS#2 is not intended for short-term sick absences, employers may use the new furlough scheme for employees who are currently off sick (subject to eligibility requirements).

Furloughed employees who become ill for whatever reason, must be paid at least Statutory Sick Pay (SSP); however, employers may decide to keep the employee on furlough leave/pay instead.

Can we make people redundant whilst they are in receipt of JRS#2?

Yes, there is nothing in the current guidance which precludes redundancies being made. Remember that there are rules around notice pay and entitlement to full pay/furlough pay. Statutory redundancy pay has to be calculated on the basis of full pay and not furlough pay.

What about those employees who were due to lose their jobs on/after 31 October 2020, should we bring them back and put them onto furlough/JRS#2?

If an employee is on the employer’s PAYE payroll before midnight on 30 October, but due to be made redundant on 31 October 2020 (of thereafter), then on the reading of the scant guidance we currently have, it could be possible. However there are important legal as well as practical considerations with this and advice should be sought.

What about employees who have lost their jobs before 30 October 2020?

Now this is something employers are going to have to think about. In the new guidance which came out on 5 November 2020, it states that employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.

Similarly, an employee who was on a fixed term contract, on the payroll on 23 September 2020, and that contract expired after 23 September 2020, the employer can re-employ them and claim under the JRS#2, provided again that the other eligibility criteria are met.

Please note, that employers can do this, they do not have to do this. As above, there are legal and practical considerations with any decision and also ensuring that if (and it is an if) employers do decide to bring some employees back it should do so fairly and in a non-discriminatory way. We advise taking advice on this, particularly remembering that JRS#2 lasts (and therefore the employee would remain on the books) until 31 March 2021, accruing employment rights. Advice should be taken.

What employees can and cannot do whilst they are on furlough leave?

The rules under JRS#2 are the same as JRS#1 so basically a furloughed employee when they are on furlough-recorded hours cannot do any work that that makes money or provides services for their employer or any organisation linked or associated with their employer. However, employees can take part in training (and would have to be paid at least the relevant national minimum wage), volunteer for another employer or organisation or work for another employer (if contractually allowed).

How can employers claim under JRS#2?

JRS#2 will run much the same as JRS#1 in terms of how (and when) employers can claim grants. As said, the minimum periods of furlough (or flexi furlough) is 7 consecutive calendar days and employers will need to report actual hours worked and the usual hours an employee would be expected to work in a claim period. The claim period must start and end within the same calendar month but if a pay period includes days in more than one month, each of those claims will need to be calculated separately. Claim periods cannot overlap, although an employer is allowed to make a claim in anticipation of an imminent payroll run which could be at the point they run their payroll or after they have run their payroll. There will be no gap in eligibility of support between the previously announced end-date of JRS#1 and the start of JRS#2; however, HMRC do need to update the legal terms of the new JRS scheme and update their systems, so business will need to claim in arrears for this period. Employers will be able to start their claim from 8am on Wednesday 11 November 2020 and claims made for November must be submitted to HMRC by no later than 14 December 2020.

What should employers do now?

Act quickly, be clear and communicate. Review the need to access JRS#2 either with existing furloughed workers or with those who were about to go on to the JSS or who are currently working and communicate – in writing – plans. To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed or flexibly furloughed. The terms of any agreement must reflect the hours the employee has actually worked or not worked over the period of the agreement. A written record of the agreement should be kept for 5 years as well as keeping a record of how many hours their employees work and the number of hours they are furloughed (for example, not working), for 6 years. However, only retrospective agreements put in place up to and including 13 November 2020 may be relied on for the purposes of a JRS#2 claim so do go back and check your letters.

For those employers who have already issued furlough letters under JRS#2 it might be just checking they are compliant.

Whilst the employee does not have to provide a written response to the request, it would be advised to keep seeking a written agreement (an email will suffice). Remember furlough and accessing the JRS#2 is a change to one’s contractual status and pay albeit temporary.

This is a rapidly changing situation and your people will be nervous so be honest and as realistic as you can be about the way ahead, without promising too much. Keep the situation under review and also be clear that employment may end if situations change. Also, keep the messaging clear and consistent so that the business speaks with one voice. 

This is (still) a marathon and not a sprint. 

As with all changes since March this year, the situation is rapidly changing and we do our best to give you the information as we know it, when we know it. If you are in HR or a business owner and want to understand what the changes mean to your business then do get in touch

Our Employment Group is working with a number of different sector clients helping them navigate the muddy waters so you are not alone. Do remember that WFH in November and the coming months is going to be different from the Summer months, so think about how you can support your leaders and workforce.

We have been working with a number of different organisations in raising mental health issues such as running stress and resilience webinars as well as focusing on remote leadership skills through our virtual Managing and Leading Remote Teams training sessions. 

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.


Get in touch

If you have any questions relating to this article or have any employment issues you would like to discuss, please contact the Employment team on [email protected]

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