Susan Ball

Written by: Susan Ball and Carolyn Brown

Susan Ball

Partner

CJRS 4: are further tweaks to the system just window-dressing?

As the CJRS now moves into version 4 from 1 May 2021, a new cohort of employees already employed as at 2 March 2021 can now be furloughed. While some will question how many businesses took on new staff after November whom they now need to furlough, it should be remembered that in November there were hopes for a winter reopening. The new Coronavirus variant dashed those hopes. If a business has been able to afford to keep those staff, they may now furlough them until the end of September, but the level of government support will taper off from July.

At the same time, government has made a change to the CJRS which does not just apply to the newly furloughed, but to all furloughed employees who are variable paid. Employers must exclude both reduced rate statutory sick pay and other family leave fixed rate pay from the look-back reference pay so that the impact of those elements on reference pay will be removed. It seems a benevolent proposal to reduce the financial impact on those furloughed. However, we may question how many variable paid employees would have the longevity of service to have been entitled to the family friendly pay rights with their employer? Its impact would not appear widespread, but must surely help some.

Despite this, every employer furloughing from May now needs to check and, if necessary, recalculate the reference pay of their variable paid furloughed staff - a substantial task for businesses not yet able to fully open, and for sectors still unable to operate.

Remember an underpayment to furloughed staff such that they do not receive 80 per cent of reference pay for furloughed hours invalidates the CJRS claim for them, mandating top up or repayment of grant monies. This change does appear then to be a trap for the unwary employer, rather than a boost to hard pressed furloughed family incomes.

It is mere window dressing perhaps in terms of workforce support, since the more costly option for the Treasury and HMRC and a better benefit for the lower paid would have been to introduce a floor on furlough rate payments at the current National Minimum Wage or National Living Wage rates, and not to continue to operate 2-3 year historic amounts for furloughed staff. The strength of support for this which generated petitions to Parliament seems to have fallen on deaf ears. 

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