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Extended furlough scheme: what it means for employers

By 03/11/2020June 22nd, 2021COVID-19, HR News, News
extended furlough scheme

Boris Johnson took to the lectern inside number 10 on Saturday evening to announce further restrictions amid surging coronavirus cases across the country.

As expected, in what is effectively a second national lockdown in England, the Prime Minister announced the closure of non-essential shops, leisure and entertainment venues as well as pubs, bars, and restaurants from the 5th November. Working from home, where possible is now actively encouraged and, for those businesses that do experience a significant drop in demand or have to close entirely, the furlough scheme has been extended.

The restrictions that come into force later this week are due to last until the 2nd December – at which point the tiered levels of restriction are expected to return.

Alongside these new national restrictions, it was announced that the existing furlough scheme would be extended in order to protect jobs and support businesses. Below, we break down what the extended furlough scheme entails and who is eligible for it.

What funding is available?

Just like the furlough scheme that was announced earlier this year, employers are able to receive grants of up to 80% of an employee’s wages (capped at £2,500 per month). Employers will pay employer National Insurance Contributions and pension contributions only for the hours the employee is on furlough.

For those employers that have flexibly furloughed staff, they should continue to pay employees as normal for the hours they do work and claim for the hours that an employee is not working under the furlough scheme.

If you wish, employers can choose to ‘top-up’ employee wages by 20% in order for them to receive 100% of their normal pay packet.

When does the extended furlough scheme end?

For now, the furlough scheme has been extended for a month – in line with the national restrictions announced on Saturday. As it stands, this is due to end on 2nd December.

Update 5th November 2020: It has today been announced by Chancellor Rishi Sunak that the furlough scheme has been extended until the end of March 2021.

Whether this second lockdown will be extended into December is still unknown, though it would be expected that the furlough scheme would be extended further should the restrictions be prolonged.

What about the Job Support Scheme?

The previously announced Job Support Scheme has been postponed, and an extended furlough scheme will take its place for the next month.

Update 5th November 2020: Following Chancellor Rishi Sunak’s announcement this afternoon, the furlough scheme has been extended until the end of March 2021.

Once the extended furlough scheme comes to an end, the Job Support Scheme will likely be introduced.

Who can apply?

This is where the waters become a little muddied and further guidance is required.

There are conflicting messages on as to who is eligible for the extended furlough scheme.

The news story published on on 31st October by HM Treasury and Chancellor Rishi Sunak states that In order to be eligible for the extended furlough scheme, employees must have been on an employer’s PAYE payroll by 23:59 on the 30th October 2020.

Contradictorily, the guidance for employers published by HMRC and updated on 1st November states that employers can now only claim if they have previously furloughed an employee before 30th June 2020. What’s more, this guidance also states that the number of employees that an employer can claim for cannot exceed the maximum number claimed for before 30th June.

Additional guidance on the matter of eligibility is expected in the coming days.

Please note: while we here at Natural HR work with HR professionals every day, we are not lawyers. This post is a high-level summary of government information about the extended furlough scheme and should not replace sound legal advice available from professional solicitors or employment lawyers.