The Furlough Famous Five!

It is unlikely to have escaped anyone’s attention that the Coronavirus Job Retention Scheme (aka the Furlough Scheme) has been extended until 31 March 2021.

Government guidance in relation to this latest iteration of the scheme is available here and the associated amended Treasury Direction is located here.

There is already much published guidance and commentary about the furlough scheme (both in its original and reincarnated forms) which we do not propose to duplicate in this e-briefing.  However, although the scheme will operate broadly as it has before, there are five key features of the extended scheme, which all businesses need to know.  These are set out below:

  1. Employees do not have to have been furloughed previously to be eligible for furlough this time round.  They will be eligible provided they were employed on 30 October 2020 and their employer has made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.  Employers can also re-employ and furlough employees who they made redundant on or after 23 September 2020.
  2. For employees who have been furloughed previously, employers must use the same calculations for the employee’s reference salary and usual hours as before.  An alternative calculation applies to those employees who are eligible for furlough under the extended scheme but who had not been furloughed previously.
  3. The government’s contribution to furlough pay is back to August levels  – i.e. the government will cover 80% of salary of eligible employees (subject a cap of £2,500 gross per month), with the employer responsible for tax, NIC’s and pension contributions as usual. The scheme is to be reviewed at the end of January 2021.  It is anticipated that, at that point, the employer’s contribution will likely be increased for February and March 2021 (as it was in September and October this year).
  4. From 1 December 2020, employers cannot furlough employees who are under notice of termination of employment (it is understood that this applies to both statutory and contractual notice periods). This is a significant change from the previous scheme.
  5. Save in exceptional circumstances (such as a serious risk of violence or intimidation as a consequence), HMRC will publish employer/company names and an indication of the value of the claims for those employers who have made claims under the extended scheme for the months of December 2020 and January 2021.

As before, employers must have confirmed to their employees in writing that they have been furloughed and employers must keep a written record of the agreement for a period of five years.  The job retention bonus scheme has been withdrawn.

For further information in relation to furlough or any other employment matters, please contact Prettys Employment Team on 01473 232121.

Sheilah Cummins