What does the furlough extension mean for employers?

6th November 2020

The chancellor, Rishi Sunak, has announced that the coronavirus job retention scheme (CJRS) will now be extended to 31 March 2021.

This means:

  • Employers can continue to claim 80% of employee’s wages (up to £2,500 cap) for hours they do not work.
  • For employees who have previously been furloughed they will continue to have their reference pay and hours based on the existing furlough calculation as under the previous scheme. Those employees who have not been furloughed previously will have a different pay/hours reference period. In summary:
    • For those on fixed wages – pay will need to be based on 80% of the wages payable in the last pay period ending on or before 30 October 2020; or
    • For those on variable wages – 80% of the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins.
  • Employers do not need to have used the CJRS before to use it now and employees do not need to have been furloughed previously to be able to use the CJRS.
  • Flexible furlough will continue as before and there will be no minimum period of furlough.
  • Employers will only have to cover employer NICs and pension contributions from 1 November for the hours not worked by the employee. The government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.
  • The jobs retention bonus will no longer be paid in February. The government will “deploy a retention incentive at the appropriate time”.
  • Employees can be furloughed whether they are unable to work because they:
    • are shielding in line with public health guidance (or need to stay at home with someone who is shielding).
    • have caring responsibilities resulting from coronavirus, including employees that need to look after children.
  • Employers may re-employ and claim for employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for them, after that date and place them on furlough.
  • As under the previous CJRS scheme, employees on furlough cannot do any work for their employer that makes money or provides services for their employer or any organisation linked or associated with their employer. Employees can, however, take part in training, volunteer for another employer or organisation and work for another employer (if contractually allowed).
  • As previously required under the CJRS scheme, agreement will be needed from employees to put them on furlough. Employees do not have to provide a written response.

Further details of this scheme can be found here – https://www.gov.uk/government/publications/extension-to-the-coronavirus-job-retention-scheme/extension-of-the-coronavirus-job-retention-scheme

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