November 5, 2020

Coronavirus Job Retention Scheme (Furlough Scheme) extended to 31st March 2021

David Dixey, specialist employment lawyer at Holmes & Hills Solicitors, discusses the 5th November announcement regarding the extension of the Coronavirus Job Retention Scheme (Furlough Scheme).

Chancellor Rishi Sunak announced on 5th November 2020 that the Government’s Furlough scheme would be extended to 31st March 2021.

At the time of writing it appears that the scheme will continue through to at least January on the same basis as announced to cover the period of the second lockdown in England, however, we await further details from the Government.

For at least the period of 1st November through to some point in January, the scheme will continue in the same form as announced for the period of November, this means:

  • The Government will pay 80% of a Furloughed employee’s salary up to a maximum payment of £2,500 (gross).
  • Employer’s only need make National Insurance and pension contributions relating to Furloughed employees.
  • Employees that have not previously been placed on Furlough can be placed on Furlough during this period of extended Furlough.
  • Flexible Furlough remains an option, meaning an employee can work some of their normal hours at full pay and receive a Furlough payment covering up to 80% of the employee’s salary for the hours not worked (up to £2,500).
  • Employees must have been on an employer's PAYE payroll by 23:59 on 30th October 2020 to be eligible to be placed on Furlough.

It is believed there will be a review of the coronavirus situation and Furlough scheme in January with a view to considering whether employers might be in a position to contribute to the salary of employees for the hours not worked. This perhaps will be along the same lines as in September and October when the Government’s contribution to Furloughed employees’ pay for hours not worked decreased to a maximum of 70% and 60% respectively, with employers then topping-up the employee’s to 80%.

Job Retention Bonus

The Job Retention Bonus, originally announced by the Chancellor on 8th July, would have allowed employers to claim a £1000 bonus payment from the Government for each employee that had been Furloughed (in full or in part) that remained employed on 31st January 2021. The Job Retention Bonus has now been scrapped, to be replaced by a 'retention incentive' to be deployed at an 'appropriate time'.

Re-engaging employees whose employment was previously terminated

Many employers would have terminated one or multiple employee’s employment in the lead up to and prior to the announcement of the extension of the Furlough Scheme, this made on Saturday 31st October. In some instances this termination of employment may not have occurred if the extension of the Furlough scheme had been announced earlier.

Where an employer, following the recent Furlough Scheme extension announcements, now wishes to re-engage a former employee and place them on Furlough, they will be able to do this as long as the employee was on the employer’s PAYE payroll on 23rd September 2020 (requiring a Real Time submission to have been made on or before the 23rd September).

Expert Employment Law Advice

Call 01206 592933 and speak to David Dixey, Employment Law specialist. 
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David Dixey

Employment Law Specialist

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