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Further Extension of the Furlough Scheme

Business meeting 15 Print publication

05/11/2020

The Chancellor, Rishi Sunak, has today announced a further extension to the Coronavirus Job Retention Scheme (CJRS) – i.e. the furlough scheme. Full guidance from the government is due next week but this is what we know so far.

The CJRS will be extended until the end of March 2021 despite the current lockdown only being intended to be until 2 December 2020. This further extension comes as the government acknowledges that the economic effects of a national lockdown last longer than the lockdown itself.

What are the key terms of the new extension?

  • The CJRS will be extended until 31 March 2021
  • Until January 2021, the government will continue to support employers by paying up to 80% of employees usual salary for hours not work up to a maximum of £2,500
  • Employers will need to pay employer national insurance contributions and pension contributions for hours not worked by employees
  • The government will review the CJRS in January and may increase the level of contributions required from employers at that stage

Do I need to have used the furlough scheme before?

Employers can claim under the extended CJRS even if they have not previously utilised the scheme and you can claim whether your business is open or closed. Employers are also able to claim under the extended CJRS for employees that haven’t previously been furloughed. However, there are different calculations for calculating these employees’ ‘reference pay’ and ‘usual hours’ and this will be set out in the guidance next week.

Is the idea of flexible furlough still available?

There is still flexibility under the extended CJRS and employers can furlough employees for any amount of time or shift pattern and on either a full-time or part-time basis. If you are intending to furlough employees under the extended CJRS you should ensure that agreement is sought from the employee and documentation put in place to indicate the change in employment terms and any new working pattern. If you implement flexible furlough, you will have to pay your employees for their worked hours along with employer national insurance contributions and pension contributions.

Is there a minimum period which staff have to be on furlough for?

There is no minimum period for which employees need to be on furlough leave or working under a flexible furlough arrangement.  However, the “claim period” which is used by the employer to submit claims under the scheme must be for a minimum period of seven days.

I’ve recently made redundancies, can I re-employ those employees?

If you have recently made redundancies and the employees were on your payroll on 23 September 2020, you can re-employ these individuals if you so wish and claim for them under the extended CJRS (provided that the other eligibility criteria is met). However, for these re-deployed individuals, you must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020.

When can I start to submit claims under the extended scheme?

Employers can start claiming from 8am on Wednesday 11 November 2020.

Mr Sunak also confirmed that the furlough scheme was “designed and delivered by the government of the United Kingdom, on behalf of all people in the United Kingdom, wherever they live and that has been the case since March, is the case now and will remain the case until next March“. Therefore, the CJRS (and the extended CJRS) applied and continues to apply to all employees in all devolved nations.

In light of the above, Mr Sunak further confirmed that the government’s Job Support Scheme, which was due to launch on 1 November 2020, is postponed and the Coronavirus Job Retention Bonus, which was to incentivise employers to keep people in work until end of January 2021, and due to be paid in February 2021, has fallen away but will be redeployed at the appropriate time.

If you would like any advice or assistance please contact the employment team, details below.

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