Open Navigation

Furlough Extension Guidance Published – But Many Questions Remain

Employers will be all too aware that until recently it looked as though the furlough, or Coronavirus Job Retention Scheme (CJRS), would end on 31 October 2020 and be replaced by the less generous Job Support Scheme. The CJRS was initially only extended to 31 January 2021. However, on 5 November 2020, Rishi Sunak announced that the scheme would continue until 31 March 2021.

The much anticipated guidance on how the CJRS will operate from 1 November 2020 has now been published, though in some key areas it does not provide as much certainty as many would have hoped.

The guidance confirms much of what we already knew regarding eligibility. In particular:

  • An employer does not need to have previously used the CJRS in order to use it from 1 November;
  • An employee does not have to have been furloughed previously in order to be furloughed from 1 November; and
  • An employee must have either;
    • been employed on 30 October 2020 and had a Pay As You Earn (PAYE) Real Time Information (RTI) submission between 20 March 2020 and 30 October 2020 submitted in respect of them; or
    • been rehired having been employed on or after 23 September (see below).

Additional eligibility requirements apply for different types of employees, for example those on fixed term contracts, apprentices and those who transfer to a new employer on a change of ownership or under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

Key Points

Provided the relevant eligibility criteria are met, the headlines for employers are that:

  • You can apply for a grant to cover 80% of the employee’s regular wages, up to a monthly cap of £2,500. You’ll still need to pay the employer National Insurance and pension contributions on your furloughed employees’ pay.

 

  • The government will review this position in January and from 1 February 2021 you may need to contribute towards an employee’s wages, though no information is likely to be available for many months as to the level of any contribution.

 

  • Furloughed employees will continue to accrue holiday in the usual way and must receive their normal pay for any period of holiday taken.

 

  • You can fully or “flexibly” furlough employees. A flexibly furloughed employee can work part time and be furloughed for the remainder of their normal working hours. You must pay them in full for the hours that they work.

 

  • You can choose to pay employees more than the 80% minimum furlough amount – but you do not have to.

 

  • Unlike the position that applied previously, there is no maximum number of employees you can claim for from 1 November 2020 onwards.

 

  • You can still make redundancies during furlough or afterwards and normal employment law principles will apply (meaning that in many cases periods of collective and individual consultation may be necessary).

 

  • At present, you can continue to claim while employees are serving statutory or contractual notice periods. However, the government is reviewing this position and will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November 2020. This could mean that the grant is not available for notice periods which start (or continue) on or after 1 December 2020. It remains the case that you cannot use the CJRS for redundancy payments.

 

  • 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 you made an RTI submission to HMRC between 20 March and 30 October 2020 for that employee.

 

  • From December 2020, HMRC will publish the names of companies and LLPs which have made claims under the scheme for the month of December onwards.

 

  • Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month you’re claiming for. If this time falls on the weekend then claims should be submitted on the next working day.

 

  • You can agree to retrospectively furlough an employee with effect from 1 November, as long as this agreement occurs on or before 13 November.

 

  • As before, you must keep a copy of all furlough records for 5 years.

 

Uncertainty

The extension to the scheme is a positive move for many employers and employees, particularly those working in sectors which will be hard hit by the second lockdown. However, its timing may leave many employees behind. Recent government statistics have confirmed that there has been a steep decline in the number of furloughed staff, likely the result of employers making redundancies in advance of 31 October, when the scheme was originally due to end. From a peak of 8.9 million employees who were furloughed on 8 May 2020 only around 3.7 million were furloughed in August 2020.

Additionally, there remain a significant number of unknowns, such as the amount of any employer contribution from 1 February and the position regarding notice pay. We are getting new announcements from the government all of the time so the position is constantly changing. These factors, combined with the very real possibility that the current lockdown may be extended, could result in uptake of the scheme being far lower than was the case in the first few months of the scheme.

 

 

The contents of this briefing are for information purposes only. All circumstances are unique and the information and opinions expressed in this document do not constitute legal advice and should not be regarded as a substitute for legal advice. No liability is accepted for the opinions contained or for any errors or omissions.

Discover how our specialist team can help you.

Request a callback

Join Magrath Sheldrick LLP Mailing List

Sign up