Furlough extended to December 2020 – what does the extended scheme entail?

Further to the announcement of a second national lockdown on 31 October 2020, the Government has confirmed that the Coronavirus Job Retention Scheme (or ‘Furlough’ scheme) will be extended.

The Furlough scheme is now expected to remain open until December 2020, with the specific end date to be clarified.
This means that the Job Support Scheme (‘JSS’), which had been set to kick in on 1 November 2020, will be postponed until the Furlough scheme comes to an end.

What does the extended Furlough scheme mean for employers?

The extended Furlough scheme sees an increase in the Government’s financial contribution to the level they were contributing in March 2020, at the onset of the pandemic.

Employers will, once again, be able to claim up to 80% of wages (capped at £2,500) for each employee for the hours not worked. The overall cost to employers to retain employees will therefore be less than it was under the most recent iteration of the Furlough scheme which ended on 31 October. The extended scheme is more beneficial than in October 2020.

Employers will still be responsible for paying pension and NICs.

Is flexi-furlough possible under the extended scheme?

Yes, this is confirmed in the Government’s most recent update.

Points to note regarding the extended scheme:

  • Employer/Employee need not have previously used the Furlough Scheme. Employers can put employees on furlough who have not previously been on Furlough.
  • There will be no gap in eligibility for support between the end of the scheme in October and the extended Scheme. The Government will shortly confirm when and how claims can first be made.
  • Employers are still welcome to top up employees’ wages above the 80% afforded by the scheme. Employers should continue to pay employees’ wages for hours worked in the normal way.
  • Employees must be on an employer’s PAYE payroll by 23:59 on 30October 2020 to be eligible for the extended scheme. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.

Further details on the mechanics of the scheme are expected to follow shortly.

What should employers be thinking about?

For many employers, a second national lockdown will mean a first or even second round of swift and difficult business decisions. Many businesses will have to shut under the new restrictions, including but not limited to non-essential retail, entertainment venues and personal care facilities. For those businesses which can remain open, employers should be considering whether their employers are able to work from home effectively. Will duties, hours or pay need to be adapted if so? Are your working from home and data protection policies up to date? Do any employees have a disability or other circumstance which may need to be accounted for? Will employment terms need to be varied in the short term to support a reduction in hours/pay? Will employees’ consent be required for any variation?

What if the work cannot be completed from home? Should employees be placed on furlough or flexi-furlough? We advise that any new furlough arrangement with employees is agreed in writing, given that furlough represents a variation to hours and possibly pay.  If flexible furlough arrangements are being put in place, this too should be recorded in writing. Thinking to the future, employers may also be considering redundancies. Employees can be consulted during furlough, and we advise employers to seek legal advice on the process.

If you are an employer and any of the above are questions which you are now faced with, please feel free to contact our experienced employment team for specialist advice and assistance (employment@curzongreen.co.uk).

This update has been prepared based on the information available and the Government guidance as at 2 November 2020. Further updated guidance is anticipated soon. We would advise you to consult the latest government guidance or contact our team for up to date advice.