UPDATE: Furlough scheme cut-off date extended

In response to UK businesses, HMRC has made further changes to the Coronavirus Job Retention Scheme by extending the eligibility cut-off date to 19 March 2020.

What is the new cut-off date?

To be eligible for furlough payments, employees must have been on the employer’s PAYE payroll by the eligibility cut-off date. This date was originally 28 February. It has now been pushed back, so that any employees put on the employer’s PAYE payroll between 28 February and 19 March 2020 will also be eligible for the furlough scheme. HMRC must generally have been notified via an RTI submission by 19 March 2020.

Why was the cut-off date changed?

The original cut-off date was designed to prevent employers from taking advantage of the government scheme by hiring ‘ghost employees’ to fraudulently take the benefit of the furlough payments.

However, businesses urged HMRC to extend the date, as the previous date excluded the large number of workers who had recently changed jobs. These workers were ineligible for furlough and many faced permanent redundancies rather than furlough leave.

New entrants can often be selected for redundancy where a “last in, first out” criterion is used as part of the selection process. New entry-level joiners are also less likely to have built up skills or experience, so may be disproportionately affected by redundancies.

Following the HMRC update, thousands more employees are now expected to be eligible for the furlough scheme and thus avoid permanent redundancy.

What happens to employees who have already been made redundant?

Some employees have already been made redundant since 28 February. HMRC has confirmed that these workers can still qualify for the furlough scheme if they are re-employed by their employer and placed on furlough. This applies even if the worker is not re-employed until after 19 March.

However, to prevent fraud, workers will only be eligible where

  • The employee was on payroll at 28 February; and
  • HMRC has already received an RTI submission from the employer on or before 28 February, notifying HMRC of that employee’s employment.

Companies should also be aware that where a worker has switched employment, only the current employer should furlough the worker, to avoid double claims for wages through the scheme.

We will of course keep you updated on any further developments.

How Blaser Mills Law can help

We have been and continue to advise businesses on their employment and HR strategy and planning. If you would like a video call with one of our employment lawyers please contact James Simpson, Head of Employment, on 01494 478689 or at jfs@blasermills.co.uk