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Extended furlough in 2021: what does it mean for employers?

By 11/01/2021April 9th, 2022COVID-19, Health and Wellbeing, HR News
Extended furlough

As the UK enters the second week of 2021, all four nations are currently in some form of lockdown. The Scottish mainland is in a similar lockdown to England with leaving home banned for all but essential reasons. Similarly, Wales entered a national lockdown on 20th December and Northern Ireland entered a six-week lockdown on Boxing Day.

While this is not the start to a new year that many of us hoped for, the surge in new cases and the discovery of a mutated strain of the coronavirus meant that swift and decisive action was required to protect the NHS and the British population as a whole.

And yet, this period of lockdown makes the start to a new year more bleak than usual for some workers. In some areas, businesses have been closed for months and demand is at an all-time low. The risk to jobs is a very real threat to our personal lives and the UK economy. As such, at the start of November, as England entered its second lockdown, Chancellor Rishi Sunak announced an extension to the furlough scheme until March 2021.

A few days before Christmas, Sunak announced the extension of furlough to the end of April 2021. With the country expected to be in lockdown until at least the middle of February (the next review is scheduled for the 15th February), if not later into 2021; the UK government is coming under increasing pressure to extend the scheme to protect jobs and businesses into the Springtime and beyond.

What funding is available?

As with previous iterations of the Coronavirus Job Retention Scheme, the government will continue to cover 80% of the wages of employees that are placed on furlough. Employers can choose to top up payments above the 80% furlough pay but this is not mandatory.

Who can be furloughed?

Back in July, employers were able to bring furloughed employees back on a part-time basis. In this situation, the government would only cover 80% of the hours not worked, with employers paying wages for the hours an employee has worked.

The eligibility criteria for the furlough scheme have not changed and employers are only required to pay employees for hours worked. For this iteration of the furlough scheme, employees being furloughed must have been on an employer’s PAYE payroll before 00:00 on or before 30th October 2020 and a PAYE RTI submission was made for them between 20th March 2020 and 30th October 2020.

For those employees with childcare obligations due to schools being closed that can’t work from home, they are now able to be furloughed in order to look after any dependents. However, it is not compulsory for an employer to do so and any plans to furlough staff must be discussed and agreed between both parties.

In cases where furlough is not an option for employees (In retail or hospitality, for example), employers must bear in mind the rules outlined in the Employment Rights Act 1996 which allows employees to take a reasonable amount of time off work, where necessary, to care for a dependent.

What does it mean for employers?

Once again, the furlough scheme is available to employers that have been particularly affected by the coronavirus pandemic. Employees that are not needed in the short-term or are unable to work from home during these periods of lockdown (retail and hospitality staff, for example) can be furloughed temporarily until business returns to some level of normality.

Businesses must continue to cover National Insurance and PAYE tax for all employees on furlough.

What’s more, employers must ensure they keep records that document the employees that were furloughed and prove an employee’s employment dates in line with the cut-off periods for entrance to the furlough scheme.

Employees that were on payroll on 23rd September 2020 but were made redundant can be re-employed and placed onto furlough.

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.