It is unlikely that the Government wants businesses to fall off a cliff in April, particularly if the country is back in tiered lockdowns, with some businesses open and others still closed. The Government will also be under pressure to announce something sooner rather than later to avoid the threat of mass redundancies, as seen before the scheduled end of the original CJRS scheme at the end of October 2020.
On 25 January 2021 the Chancellor signed an amendment to the legislation which allows for the CJRS to continue from 1 February to 30 April 2021. It contained some modifications to the required calculations for claims made in March and April 2021 for variable-paid employees, as those months would have involved a look back to a potential period of furlough in March/April 2020.
The Budget is on 3 March and the Chancellor must be looking at what he should do next and how it is going to be paid for. This recent publication of the names of the employers that claimed CJRS in December 2020 is likely to have changed some employers’ views on claiming, reducing the overall level of government support being provided.
For example, Office for National Statistics data showed that around 31 per cent of businesses that claimed CJRS to October had over 250 employees. Will these larger businesses have reconsidered and stopped claiming CJRS grants for their December payroll to avoid negative publicity? This potential influence on the level of claims is coupled with a change which meant that, from December 2020, CJRS grants could not be claimed for those employees who were on notice, including redundancy notice periods, the result of which means staff-exiting costs are now unsupported.
The value of claims made in January 2021 for the December 2020 pay period will certainly influence the Chancellor’s thinking, but what are the likely options for workforce cost support after April?
For starters, the CJRS could be extended again, perhaps with a phased reduction in support as we saw in September (70 per cent support for wages) and October 2020 (60 per cent support for wages), but with employees still receiving at least 80 per cent of their normal earnings for non-worked hours.
The previously announced job support scheme (JSS), that was scheduled to run from 1 November for an initial period of six months but was postponed when the CJRS was extended, could also be dusted off. This replacement support scheme is still an option, either as it was originally planned, or in some amended form. It had two parts, as follows:
- JSS Open – for businesses that are allowed to open, but need extra support to retain employees due to reduced consumer demand.
- JSS Closed – for businesses that have been legally required to close as a direct result of coronavirus restrictions set by Westminster or one of the three devolved governments in the UK.
The job retention bonus (JRB) was also postponed when CJRS was extended. The JRB was to be a £1,000 one-off taxable payment to employers for each eligible employee furloughed and kept continuously employed until 31 January 2021. It was intended to be claimable between 15 February and 31 March 2021 in respect off employees not by then on notice of termination. The government could reintroduce this, revising the claim dates to start at the end of April 2021 and so incentivising staff retention. Its cost to the Exchequer would depend on whether the qualifying period of furlough just includes version 3 of the CJRS (November 2020 - April 2021) only, or must also include periods covered by version 1 (March - June 2020) and version 2 (July - October 2020).
What is clear is that employers need to know, sooner rather than later, where the Government is heading, both with regard to lockdown restrictions and also in the support on offer to avoid mass redundancies in the months ahead.