Extended Furlough Scheme Guidance issued

The Coronavirus Job Extension Scheme has been extended until 31 March 2021 across the UK.  The Government has issued 11 sets of Guidance on the operation of the new scheme, below we detail the key points in the new Guidance.

Financial support:

  • The extended furlough scheme will reflect the previous furlough scheme in August, so the Government contribution will be 80% of wages up to a cap of £2,500. Employers will only pay Employer NICs and pension contributions on the amount paid to employees.
  • The Government will review its position in January to see if employers should contribute more.
  • As before, employers can choose to top up employee wages but do not have to do so.

Flexible furlough:

Flexible furlough is allowed under the extended scheme; businesses have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time.

Employee numbers:

There is no maximum number of employees employers can claim for from 1 November 2020. This is a change from the previous furlough scheme.

Eligibility – Employers:

  • In terms of eligibility for the extended scheme, neither the employer nor the employee needs to have previously used the furlough scheme.
  • The employer Guidance states that employers can furlough employees and apply for a grant “if you cannot maintain your workforce because your operations have been affected by COVID-19”.
  • All employers with a UK bank account and UK PAYE schemes can claim the grant.

Eligibility – Employees:

  • The scheme is available in respect of employees, on any type of contract, who were on the employer’s PAYE payroll by 23:59 on 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made between 20 March and 30 October 2020. This may differ where you have re-employed an employee after 23 September 2020.
  • Rehiring people: If you made employees redundant, or they stopped working for you on or after 23 September 2020 you can re-employ them and put them on furlough. This applies as long as the employee was employed and on PAYE payroll on or before 23 September 2020. This means an RTI submission notifying payment for that employee to HMRC must have been made between 20 March and 23 September 2020.
  • Employees on fixed term contracts: If the employees fixed term contract has not already expired it can be extended or renewed.
  • TUPE: a new employer is eligible to claim in respect of the employees of a previous business transferred if the TUPE or PAYE business succession rules apply and the employees being claimed for have previously had a claim submitted for them by their prior employer.

Notice periods:

  • The employer Guidance says “You can continue to claim for a furloughed employee who is serving a statutory notice period
  • Importantly employers should note this may soon change in any event. Further guidance says “The government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November”. Employers considering dismissals should therefore be aware that the costs of notice pay after 1 December may not be covered by the scheme.

Holiday pay:

  • The Guidance confirms that, as before, employees can take holiday whilst on furlough.
  • Employees should be paid at 100% of normal rate of pay for holiday periods.
  • If an employee is on flexible furlough, any hours taken as holiday should be counted as furlough hours, not working hours, meaning the furlough pay can be claimed for but employers will need to top up the employee’s holiday pay to meet the 100% threshold.

Calculations and operation of the scheme:

  • Employers are able to claim from 11 November for claim periods starting on or after 1 November.
  • Although the process for making a furlough claim is the same, there is a shorter claim window. For example, claims relating to November 2020 will have to be made by 14 December 2020, with claims relating to each subsequent month being submitted by day 14 of the following month.

What should employers do now?

As with previous versions of the scheme, employers will need to have employee agreement to furlough employees and use the scheme. For those employees who were furloughed in October employers should still clearly set out the figures and working arrangements relevant to the new extension and obtain employee agreement.

Employers can agree retrospectively to furlough someone with effect from 1 November 2020, but this must be done quickly as the agreement to retrospectively claim furlough must be in place by the end of the day this Friday, 13 November.

Please see below the link to the guidance. 

https://www.gov.uk/government/publications/extension-to-the-coronavirus-job-retention-scheme/extension-of-the-coronavirus-job-retention-scheme

This is not intended to give legal advice on the new furlough scheme.  If you have any queries, please get in touch. 

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