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Extension to the Furlough Scheme

Nov 2, 2020

Only a matter of hours before being due to close, the Government announced that the Coronavirus Job Retention Scheme (Scheme) would be extended until at least December. It was also confirmed that the Job Support Scheme (Open and Closed), which was set to launch yesterday, will be delayed.

As England prepares for a second national lockdown, this extension will be welcomed by employers. We have prepared a summary of the key points of extension and the current implications for employers.

How will the extension work?

The Scheme is being extended until December, with the level of the grant being the same as was available under the Scheme back in August. The Government will pay up to 80% of an employee’s normal pay, capped at £2,500 a month. This differs to the last three months, where the Government had been steadily reducing their contribution and requiring employers to increase theirs.

Employers will not be required to contribute to wages but will be required to pay NICs and pension contributions.

Flexible furlough will continue to operate, allowing employees to work reduced hours and receive a furlough grant for the hours that they don’t work.

When claiming the grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days. Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.

For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

Who is eligible?

All employers with a UK bank account and PAYE schemes can claim. Importantly, neither the employer nor the employee needs to have previously used the furlough scheme which means more employees can benefit. This is another change to the Scheme, which was closed to new applicants from 30 June.

Employees will be eligible provided they were on their employer’s PAYE payroll before midnight on 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.

As with the original furlough scheme, employees can be on any type of contract, including zero-hour and casual worker agreements.

Do we need agreement from employees?

Yes, as with the rules of the original furlough scheme, employers will need agreement from employees to be placed on furlough. Employers must ensure that any agreement is consistent with employment, equality and discrimination laws and a written record of the agreement is kept for at least five years.

Can we rely on previous furlough agreements?

Where employees were already on furlough, or have previously agreed to a furlough arrangement, employers may be able to rely on the existing agreement to use the extended scheme. This would, however, depend on the wording of the previous agreement, and we advise an appropriate written announcement is made to confirm the extended arrangements. We would recommend carefully reviewing any such agreements to identify whether any variations may be required to continue using the Scheme.

What if we have already obtained agreement to the Job Support Scheme?

Some employers may have already put in place JSS agreements. In these circumstances, employers should be looking to contact affected employees as soon as possible to explain the current position. As above, where furlough agreements have previously been in place, employers may be able to rely on these. The wording of any JSS agreement should also be reviewed if an employer is seeking to rely on a previous furlough agreement.

If you require any assistance in preparing suitable furlough agreements or require advice on whether your existing furlough agreements will continue to work for the extension, please get in touch with our Employment Group on 0118 977 4045 or employment@herrington-carmichael.com.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter. 

By Tom Hyatt

Trainee Solicitor, Employment Law 

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