Furlough Extended: What does this mean for employers?

The Government has now announced that the Coronavirus Job Retention Scheme (CJRS), more commonly known as furlough, will be extended until 31 March 2021. Full guidance is yet to be published, but the extension will come as welcome news to both employers and employees.

What does that mean for employers?

CJRS has already been extended once, but due to the impact that Coronavirus is having on the UK economy, it is being extended yet again. Employers will not be required to contribute to wages for hours not worked. Instead, they will only need to cover the National Insurance and Employer pension contributions for those hours.

It is hoped that employers should be able to keep their employees during these difficult times, rather than being forced to make redundancies. However, any employees who were made redundant or stopped working after 23 September 2020 can be re-employed and claimed for. Whilst the Government will still contribute 80% of wages for hours not worked, the updated scheme will have a monthly cap of £2,500.

Employers will still have the ability to rely on flexible furlough, by placing their employees on either a full-time or part-time basis depending on business need.

Employers can also place employees on furlough regardless as to whether or not the employer has claimed, or the employee has been claimed for previously. Although employees must have been on the PAYE payroll on 30 October 2020 to be eligible. Any employees who were placed on furlough under the previous scheme will continue to have their reference pay and hours based on the existing furlough calculations.

The pay will be slightly different, for employees who have not been furloughed before. We are still waiting for guidance on this but initial guidance is that the pay for those on fixed wages will be based on 80% of the wages payable in the last pay period ending on or before 30 October 2020. For those who are on variable wages, it is likely that their pay will be calculated on 80% of the average payable between the start date of their employment, or 6 April 2020 (whichever is later), and the day before the scheme extension.

The updated scheme will be reviewed in January 2021, at which point employers may be asked to increase their contributions until the new deadline of 31 March 2021.

Employers can begin to make claims from 11 November, and will have until 14th of each month to submit any claims for the previous month. If an employer has an employee who has been advised to shield or is required to stay at home due to someone else shielding, they can be placed on furlough.

Are there any changes to the previous scheme?

Any flexible furlough or furlough agreements that have been made retrospectively and have effect from 1 November 2020 will be valid for the purposes of the scheme, although they must have been put in place by 13 November 2020 to qualify.

What about the Job Support Scheme and Job Retention Bonus?

The Job Support Scheme has been temporarily placed on hold, whilst the Job Retention Bonus will now be paid in February 2020.