Updated on 16 November 2020 with the latest guidance
In an unexpected U-turn, the Chancellor, Rishi Sunak, announced that the Coronavirus Job Retention Scheme, also known as furlough, will remain open until 31 March 2021.
The Guidance for the “extended” Scheme was published on 10 November, with further guidance coming on 13 November, and here’s what we know so far.
What does this mean for employers?
- The government will pay up to 80% of wages subject to a cap of £2,500 until January 2021 – the percentage will be reviewed again for February and March.
- Employers will pay NI pension contributions.
- Employers can claim even if they, or the relevant employees, had not previously used the Scheme.
- Employees who were on the payroll on 23 September 2020 who has since been made redundant or stopped working for the employer can be re-employed and put onto the furlough scheme.
- Employers had until Friday (13 November 2020) to agree to retrospectively to furlough someone with effect from 1 November 2020. The deadline to retrospectively furlough employees has now passed.
- Flexible furlough will continue to be an option.
- Employers can top this up but there is no obligation to do so.
- Employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE submission to HMRC between 20 March 2020 and 30 October 2020.
- Employers should note that HMRC intends to publish the companies who use the Scheme from December onwards, as well as a “reasonable indication of the amount claimed. The only exception to his will be where an employer can show that publication would expose their workforce to “serious risk of violence or intimidation”. It is unclear to whom this could apply.
- There is no obligation to use furlough.
Eligibility for employers
- The latest employer guidance states that employees can be furloughed if you “cannot maintain your workforce because your operations have been affected by coronavirus”.
- They must have a UK bank account and UK PAYE scheme.
- They don’t have to have used the scheme previously.
- Those organisations that are partially public-funded may now be eligible for support where the business is disrupted due to the virus.
Eligibility for employees
- Must be on the payroll by 30 October 2020 and RTI submitted to HMRC.
- Any contract types are eligible.
- There is no minimum number of weeks or days that an employee must be on furlough.
- 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.
- 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). However, there are no obligations for employers to furlough anyone.
- Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer after that date can be re-employed and claimed for.
- If you are being made redundancy you can ask your employer to furlough you instead, but they have no obligation to do this.
Notice on furlough
- The updated guidance states that the “government is reviewing” whether the employer should claim where employees are on notice and furlough, after 1 December 2020, employees cannot serve their notice and be on furlough at the same time, both statutory and contractual. Read more here.
- You must agree on this in writing with anyone you plan to furlough. You should retain the agreement for 6 years. But what does the agreement need to include? – We have set this out in a blog here.
- Furlough agreements must be in place before the start of the claim period. The deadline to retrospectively furlough employees has now passed.
Employees can take holiday during lockdown and furlough, but this must be paid at 100% of their wages. See our blog on annual leave which we drafted in the last lockdown. It’s worth bearing in mind that employees can also carry over their entire statutory holiday for the next two years if they have been unable to take it due to Covid.
Tip – if you are bringing someone back, who has already been dismissed, just to furlough them, then they will accrue holidays during furlough and you will have to pay them for this either during furlough by topping this up to 100% or as a lump sum when they leave.
What about the Job Support Scheme and Job Retention bonus?
Both the Job Support Scheme and the Job Retention Bonus have been put on hold for now. Instead, the government says a retention incentive will be “deployed at the appropriate time” because the policy intention behind the Job Retention Bonus has fallen away.
The following are our historical blogs on furlough which remain as relevant today, as they were when they were originally posted.
- Our OG furlough blog – The F Word
- Furlough and annual leave
- Pregnancy, Maternity and Furlough
- Unfurloughing Employees
- Calculating notice pay for employees on furlough
- Commission under furlough
- Maternity Discrimination and Flexible Furlough
- How to avoid accidental furlough fraud
- Furlough: What difference has it made?
Had enough of furlough? These may also be helpful at the moment:
- Face Coverings in the Workplace: What are the Rules?
- Life in Lockdown: The Impact of Grief and Employees’ Rights
- Life in Lockdown: NHS Staff and Possible PTSD After COVID-19
- Life in Lockdown: The Distressing Rise in Domestic Abuse and How Employers Can Help
- Coronavirus FAQs
- Disability and Shielding
- The Impact of Coronavirus on Employment – The Home Working Revolution
- Coronavirus is contagious, but panic is too
- The effect of lockdown on diversity in the workplace
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Please note this blog is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action. Please contact us if you have any questions on firstname.lastname@example.org