Extension of the Furlough Scheme to 31 March 2021
Posted on 6th November 2020
Updated on 17 November 2020
On 31 October, the Coronavirus Job Retention Scheme, better known as the ‘furlough scheme’ was due to end and be replaced from 1 November with the less generous Job Support Scheme. Following an eleventh-hour announcement that the government intended to enforce a second lockdown in England, which began on 5 November 2020 and is anticipated to continue until 2 December 2020 the government announced that the furlough scheme would be extended.
On 5 November 2020 the Chancellor announced that furlough would be extended until 31 March 2021. The government issued a policy paper setting out some of the details.
The government indicated that it was in the process of updating the system to be used by employers to process claims, and that additional guidance about the extension of the scheme would be published on 10 November. On 10 November the government published thirteen sets of updated guidance and we have updated our Frequently Asked Questions below about some of the key points.
Note that the Job Retention Bonus, due to be paid out for employees retained after furlough until the end of January, has been put on hold.
The self-employed income support grant for the period from November to January has also increased from 55% to 80% of average profits, up to £7,500.
How long has the furlough scheme been extended for?
The furlough scheme has been extended until 31 March 2021.
What impact will this have on the wages of furloughed employees?
The government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions, but only for the hours the employee does not work. The level of the government’s contribution will be reviewed in January 2021 at which point the government will decide whether or not to ask employers to contribute more.
In recent months the government had reduced the level of their contribution down to 60%, making the scheme more expensive for employers who had to top up wages by 20%. Until at least January, the extended furlough scheme will mirror the level of contributions being made by the government in August, which is good news for employers as it makes the scheme more affordable, which should in turn protect more jobs.
The policy paper contains more detail on how employers must do their calculations and the process/time limits for making claims.
Who is eligible under the extended furlough scheme?
In order to be eligible, employees (who can be on any type of contract e.g. full-time, part-time, zero-hours, agency etc) must have been on their employer’s PAYE payroll by 23:59 on 30th October 2020. That means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made between 20 March 2020 and 30 October 2020. Employees do not need to have been furloughed previously.
Government guidance confirms that for claim periods running from 1 November there is no cap on the number of staff employers can claim for.
To ensure employers can claim from 1 November, new/updated furlough agreements will need to be put in place by 13th November (these can be backdated to 1st November, so long as the employee has actually been on furlough during this time).
Will flexible furloughing continue?
Yes, both full time furloughing and flexible furloughing will still be allowed under the extended scheme. Any hours worked by employees will be paid by employers in accordance with their employment contract.
Can I be furloughed if I am shielding or have caring responsibilities resulting from coronavirus?
Yes, recent government guidance confirms that employees can be furloughed if they are unable to work because they are shielding (or need to stay at home with someone who is shielding), or because they have caring responsibilities resulting from coronavirus (including looking after children). However, there is no obligation on employers to furlough in these circumstances. If you are in this position, then you should speak to your employer about being furloughed.
I’ve recently been made redundant, can I ask my previous employer to furlough me?
If you were still on your employer’s payroll on 23 September 2020 and you have since been made redundant or stopped working (e.g. your fixed term contract expired) you can be re-employed and claimed for. This means an RTI submission notifying payment for that employee to HMRC must have been made by your employer between 20 March and 23 September 2020.
However, there is no obligation on employers to re-hire. Employers will be thinking about whether there is likely to be a job for you come next March; the additional cost of employer NICs and pension contributions and potentially an increase in the employer’s contribution to furlough come January; and what to do about any redundancy payments already made.
In addition, on 13 November the government issued further guidance about the extended scheme in which it confirmed that ‘For claim periods starting on or after 1 December 2020, your employer cannot claim for any days on or after 1 December 2020 during which you were serving a contractual or statutory notice period for your employer (this includes people serving notice of retirement or resignation).’ This will no doubt impact an employer’s decision to re-hire, as from 1 December if an employee is given notice of termination (and any re-hired employee would have to be given notice again) the employer will no longer be able to claim for an employee under the scheme.
It is also of note that although employers can retrospectively furlough someone with effect from 1 November, in order to do so an agreement must have been in place on or before 13 November.
Will being furloughed affect my employment rights?
No, if you are an employee you will still have the same rights at work even if you are furloughed e.g. right to Statutory Sick Pay (SSP) and annual leave.
I am due to return to work following a period of statutory parental leave, can I be furloughed from 1 November?
Yes, the normal furlough scheme rules apply if you are an employee returning from statutory parental leave, which includes maternity, paternity, adoption, shared parental or parental bereavement leave.
I am on maternity leave, can I end my maternity leave early and be furloughed?
It is possible to end your maternity leave early and be furloughed, but only with your employer’s agreement. In addition, you will still need to give 8 weeks’ notice prior to your return and during that notice period your employer will not be able to furlough you.
Will the furlough scheme be updated again in January?
On Friday 13 November HM Treasury published their fourth Treasury Directive about the extension of the furlough scheme to 31 March 2021, setting out how the scheme will operate until the end of January 2021 and confirming that a further Direction will be provided for the scheme applying after 31 January.
Visit the government website for further guidance and clarification on the operation of the scheme, as well as further announcements in the future.