Furlough scheme extended… again!
You could be forgiven for blinking and missing yet another extension to the furlough scheme. Speaking in the Commons on 5 November, Rishi Sunak announced that the Coronavirus Job Retention Scheme will continue to the end of March 2021. This followed the government announcement on 1 November, that the scheme would be extended until the end of November.
Full guidance in respect of the scheme as it works from 1 November to 31 January 2021 will be available on 10 November. In January, the scheme will be reviewed and guidance for claims from 1 February onwards will follow that review.
In the meantime, HMRC has published a policy paper. We’ve condensed the key points here.
Furlough scheme extension key points
- The furlough scheme remains open until 31 March 2021
- For claims running to January, employees receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month (proportional to the hours not worked)
- The grant will be fully funded by the government, although employers must pay for any hours worked, and fund pension and NI contributions on both furlough pay and pay for any worked hours
- In January, the government will conduct a review and decide whether employers will be asked to contribute more
Who can claim and eligibility?
- All employers can claim, whether their business is open or closed, and regardless of whether they used the scheme previously
- The government intends to publish details of employers who claim under the extended scheme, starting from December
- The extended scheme will cover employees who were employed and on PAYE payroll on 30 October 2020.
- Employees do not have to have been previously furloughed to be eligible
How will the ‘new’ version of furlough work?
- The extended scheme will be fully flexible. Employees can be furloughed full time or be on “flexi-furlough”, for any amount of time or shift pattern, full or part time furlough and hours worked can be varied in agreement with the employee (the minimum claim period however remains 7 consecutive days)
- There are different methods of calculating furlough pay depending on whether the employee has been furloughed previously, or whether they meet the terms of the current scheme but not the previous, or neither of those options
- The rules remain the same around working during furlough, and furloughing those who are shielding, sick, etc
The furlough agreement
As previously, the employer must have the contractual right to reduce the pay and working hours of the employee they want to furlough. To be eligible for the grant, the employer must have confirmed to the employee in writing that they have been furloughed, or flexibly furloughed. The employee does not have to provide a written response (but we advise it’s good practice to make sure they do)
The terms of the furlough 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 the scheme so they can make a claim in relation to hours not worked (this is a very wide catch all – we can provide employers with a furlough agreement to make sure you can satisfy the requirements to claim the grant)
Provided a furlough agreement is put in place before 14 November, if it says it took affect from 1 November (and meets the rest of the requirements) it will be valid.
What happened to the JSS scheme and the Job Retention Bonus?
The JSS and Job Retention Bonus have both been put on hold until further notice.