On Saturday 31 October 2020 the government announced that there was to be an extension of the Coronavirus Job Retention Scheme, also known as the ‘furlough’ scheme, to correspond with the second national lockdown. It has just been announced that the furlough scheme will now be extended until to 31 March 2021.
The furlough scheme was originally due to expire on 31st October 2020 and to be replaced with the Job Support Scheme.
Under the furlough extension, the government will revert to paying 80% of wages for those placed on furlough due to the coronavirus pandemic restrictions up to a maximum of £2,500. This percentage may be reviewed for February and March. Employers are required to pay national insurance and pension contributions and may top up wages to 100% if they wish to. There is currently no requirement for employers to contribute to wages for hours not worked. The situation will be assessed in January and it will be determined whether or not the economic circumstances are improving enough for employers to be asked to increase contributions.
The extension represents an unexpected course of action by the government and replicates the terms of the ‘flexible furlough’ scheme, which was available in August 2020.
Employees can be placed on full-time furlough or can be asked to work some of their usual hours (for which they would receive full pay) and to be placed on furlough for the remaining hours (for which they would receive a minimum of 80% up to the £2500 cap).
The extended scheme is available to employers and employees regardless of whether they had previously accessed the furlough scheme which is a positive development.
Employees who have previously been furloughed will continue to have their reference pay and hours based on the existing furlough calculations (as under the old scheme). Employees who have not previously been furloughed will have a different pay/hours reference period. Pay is based on 80% of the wages payable in the last pay period ending on or before 30 October 2020 (for those on fixed wages) or 80% of the average payable between the start date of their employment or 06 April 2020 (whichever is later) and the day before their CJRS extension furlough period begins (for those on variable wages).
Employees can be furloughed if they are shielding in line with public health guidance (or need to stay at home with someone who is shielding).
Employees who were employed and on the payroll on 23 September 2020 but who were made redundant or stopped working for their employer after that date can be re-employed and claimed for.
The Job Support Scheme, which is less generous than the furlough scheme and has additional conditionality, and the Job Retention Bonus Scheme have both been put on hold and replaced by the furlough extension.
Agreement to being placed on furlough should be recorded in writing.
The extension of furlough will be UK-wide.
It is unclear how the interaction of the local tier system will play out with the extension of the furlough scheme. Full guidance is due to be published next week, on 10 November 2020.
Support for self-employed workers through the Self-Employment Income Support Scheme (SEISS) will be increased, with the third grant covering November to January calculated at 80% as opposed to 55% of average trading profits, up to a maximum of £7,500.
If you would like further information on what the new schemes might mean for you, please contact Debbie Sadler on 01494 478 671 or at firstname.lastname@example.org