Furlough Scheme Extended to March 2021

On 5 November 2020, the Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) will be extended until 31 March 2021 and it is more generous than the scheme running in September and October.

Until at least January 2021, Employers will be able to claim 80% of employees’ wages, capped at £2,500 for hours not worked. Employers must pay the national insurance and employer pension contributions on employees’ furlough pay. The percentage may be reviewed for February and March.

Full guidance is due to be published next week, on 10 November 2020 and claims can be made from 11‌‌‌ November 2020.

Key Points Confirmed by HMRC

From the HMRC Policy Paper, we know this much so far:

• The Chancellor confirmed that the CJRS applies to the whole of the UK equally. 

• Employers do not need to have used the CJRS previously and can claim whether their business is open or closed. 

• Employees can be fully or flexibly furloughed. 

• Employees must have been on the employer’s payroll on 30 October 2020, but do not need to have been furloughed previously. 

• Employees who were made redundant or stopped working for their employer after 23 September 2020 can be re-employed and claimed for under the scheme. 

• Employers will be able to claim for the period from 1 November from 8.00 am on 11 November 2020.

• Employees who have previously been furloughed 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. Full guidance will be provided on 10 November, but broadly the 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 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods 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). That does not, of course, mean they have to be furloughed.

Eligibility for Extended Furlough Scheme

To be eligible for the grant, employers must have confirmed in writing to their employee (or reached collective agreement with a trade union) that they have been furloughed. The employee does not have to provide a written response. Also:

“Where consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a CJRS claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a CJRS claim.”

What About the Job Support & Job Retention Schemes?

It was also confirmed that the Job Support Scheme has been “postponed”. It is not known whether it will be introduced after the CJRS ends.

The Job Retention Bonus has been deferred and a new retention incentive scheme will be deployed at a later date. A third grant for the self-employed will be available covering November to January of 80% of average trading profits up to a maximum of £7,500.

The UK Government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.

Support for Employers

The COVID-19 lockdown restrictions and extension to the furlough scheme continue to present numerous and complex challenges for Employers. 

If you are an Employer and require advice and support on any employment matters, COVID related or otherwise, call us now on 0800 612 4772 or Contact us via our website and we will set assist you to navigate through the employment law minefield created by the COVID-19 crisis and comply with your legal obligations.