Extension of the furlough scheme in light of second national lockdown

Posted: 03/11/2020

The Government was set to end the Coronavirus Job Retention Scheme (known as the “furlough scheme”) on 31 October 2020 and introduce the Job Support Scheme (JSS) on 1 November 2020. However, following the Prime Minister’s announcement on 31 October 2020, namely that England will go into a second lockdown, plans to launch the JSS on 1 November 2020 have been postponed.

We now expect the JSS to replace the furlough scheme in December 2020. In order to bridge the gap left by the postponement of the JSS, the Government has confirmed that the furlough scheme will be extended for a month, until December.

The rules for the extended furlough scheme can be summarised as follows:

• employees will receive 80% of their current salary for hours not worked, up to a cap of £2,500
• employers will be able to claim a grant and will only be asked to cover National Insurance and employer pension contributions for the hours the employee does not work
• employers are still able to choose to top up employee wages above the scheme grant, at their own expense, if they wish
• employers can still ask employees to work part-time (“flexi-furlough”) and claim the grant for the unworked hours
• neither the employer nor the employee needs to have previously used the furlough scheme to be eligible
• all employers with a UK bank account and UK PAYE scheme can claim the grant
• to be eligible, employees must be on an employer’s PAYE payroll by 23:59 30 October 2020 and as before, employees can be on any type of contract;
• when claiming the furlough grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days
• many employers have already written to their staff to agree a JSS agreement in anticipation of the scheme commencing on 1 November so employers will need to update staff accordingly
• in all cases, employers should write to the employee to place them on furlough leave and agree the terms of the furlough leave in the usual way

The exact end date of the extended furlough scheme remains unclear but HMRC will be issuing further guidance soon. In the meantime, please do not hesitate to contact a member of the team if you wish to discuss in further detail.

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