Furlough extended to the end of March: what we know so far

7 mins

Posted on 05 Nov 2020

The Chancellor, Rishi Sunak, has this morning announced a further extension to the coronavirus job retention scheme (CJRS) until the end of March 2021. 

This follows the announcement on Saturday that the CJRS scheme would continue until 2 December, following the new national lockdown in England which started today.

What we know - the basics

The headlines are that:

  • Employers across the UK will be able to claim, whether their businesses are open or closed  
  • Employers will be able to put employees on full-time or flexible furlough – with the employer having to pay for hours worked as usual  
  • The Government will fund 80% of wages for hours not worked, with employers only having to pay employer NICs and pension contributions. The Government will review this in January and decide whether to require employers to contribute more 
  • The Government’s contribution will be capped at £2,500 per month, which reduces proportionately for employees who are flexibly furloughed
  • Neither the employer nor the employee needs to have used the scheme before. However, the employee must have been on the employer’s payroll on 30 October 2020 and the employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020 notifying a payment of earnings to that employee
  • Businesses will be able to claim either shortly before, during or after running payroll. Claims can be made from 8am Wednesday 11 November, with claims for November having to be submitted to HMRC by no later than 14 December. Claims relating to each subsequent month should be submitted by day 14 of the following month
  • Employees who were employed and on the payroll on 23 September 2020 (the day before the Job Support Scheme announcement) who were made redundant or stopped working afterwards can be re-employed and claimed for. The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees

The Government has promised to provide full guidance on the extension on 10 November but in the meantime has set out some more detail in a policy paper, also published today.  

What more does the policy paper say?

As this is an extension of the furlough scheme, the Government intends that the rules will remain the same, except where it says otherwise. So, employers will only be able to use the scheme where their business has been adversely affected by coronavirus, coronavirus disease or measures taken to prevent or reduce transmission.   

Employee eligibility

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).  They can also be furloughed if they have caring responsibilities resulting from coronavirus (including looking after children). 

The scheme is not intended for short term sickness. However, the fact an employee is on sick leave does not stop the employer putting them on furlough if they need to do so for business reasons, as with other employees.

An employee who was on a fixed term contract and on payroll on 23 September which expired after 23 September can be re-employed and claimed for, provided that the other eligibility criteria are met.

No work

During furloughed hours, employees cannot do any work for their employer that makes money or provides services for their employer, any linked organisation or an associated employer.

Employees can, however, take part in training, volunteer for another employer or organisation and work for another employer (if contractually allowed) without falling foul of the no-work rule.

Employee rights

Furloughed employees will retain their rights at work, including the right to Statutory Sick Pay, annual leave, maternity and other parental rights, rights against unfair dismissal, redundancy payments and the right to be paid at least the National Minimum Wage for hours worked.

Agreement with employees

There will be no minimum furlough period, but the period claimed for must be for a minimum of 7 consecutive calendar days.

Where employees are flexibly furloughed, they can work for any amount of time, and any work pattern.

Employers should discuss furlough with their staff and make any changes to the employment contract by agreement. They should provide the employee with written confirmation of the furlough agreement but there is no need for the employee to provide a written response.  

Employers need to keep a written record of the agreement for five years and keep records of how many hours their employees work and the number of hours they are furloughed for six years. They also need to ensure the agreement is consistent with employment, equality and discrimination laws.  

The terms of the agreement must:

  • Reflect the hours the employee has actually worked or not worked over the period of the agreement
  • Allow the employer to satisfy the terms of CJRS so they can make a claim in relation to hours not worked

Provided the employer has complied with employment laws, any flexible furlough or furlough agreement made retrospectively but having 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 claim under the scheme.

When deciding who to furlough, equality and discrimination laws will apply in the usual way, so employers need to watch out for disability, age, sex and other potential discrimination.


Employees previously eligible for furlough

Where employees were previously eligible for furlough (because they were on an RTI submission on or before 19 March 2020), employers will have to calculate the employee’s reference pay and usual hours in accordance with the calculations that applied from August 2020. This is the case even if the employee has not previously been furloughed.

Employees not previously eligible for furlough 

Where employees were not previously eligible for furlough, the calculations will be based on updated reference periods. For employees on a fixed salary employed on or after 20 March 2020, you use 80% of the salary for the last pay period ending on or before 30 October 2020. For employees whose pay varies who were employed on or after 20 March, you use 80% of the average payable between 6 April 2020 (or the start date of the employee’s employment if later) and the day before their furlough under the extended scheme begins. These calculations are subject to the scheme cap. 

Usual hours are also calculated using an updated reference period. For employees with fixed hours and whose pay does not vary according to the number of hours worked, you use the contracted hours for the last pay period ending on or before 30 October. For employees with variable hours, you use the average hours worked between 6 April 2020 and the day before their furlough under the extended scheme begins.

Full details of the calculations will be provided in guidance on 10 November 2020.

Making claims

Employers will have to report and claim for a minimum period of 7 consecutive calendar days.  They will need to report actual hours worked and the usual hours an employee would be expected to work in a claim period. The claim period will have to start and end in the same calendar month.  If the pay period includes days in more than one month, each of those claims will need to be calculated separately.  Claim periods cannot overlap, and employees claimed for will need to be included in each separate claim made.

What about the Job Retention bonus?

The Government had planned to pay business a job retention bonus of £1,000 per previously furloughed employee they kept on until at least 31 January 2021. This bonus will no longer be paid, although the Government says it will reintroduce a retention incentive at an appropriate time. 

 What about the Job Support Scheme? 

The Job Support Scheme, which had been intended to replace the furlough scheme from 1 November has now been put on hold.  

Further information on the furlough extension and further measures announced today to support businesses and the self-employed can be found in the Government’s Economic Support Sheet.  

The articles published on this website, current at the date of publication, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your own circumstances should always be sought separately before taking any action.

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