On 10 November 2020, the UK government issued 11 sets of guidance of the operation of the extended furlough scheme. This guide aims to summarise the key aspects of the scheme.
The scheme is an extension of the Coronavirus Job Retention Scheme (CJRS). It will run from 1 November 2020 until 31 March 2021.
It covers both full and flexible furlough. As a reminder:
The extended furlough scheme will reflect the specifics of the CJRS in August. The Government will contribute 80% of wages (capped at £2,500 per month) and the percentage of the Government’s contribution will be reviewed in January 2021, likely resulting in increased contribution from employers.
Employers are required to pay the employer NICs and pension contributions on the wages paid to employees. Employers can choose to top up employee wages but do not have to do so (albeit they will need their employee’s agreement, see below).
As before, the extended scheme is designed to help UK employers whose operations have been severely affected by COVID-19 to maintain their workforce. This allows employers some leeway and is a much easier test to meet than the “viable” pre-condition in the now suspended Job Support Scheme. The wording is included to discourage abuse of the system.
There is no maximum number of employees’ that employers can claim for from 1 November 2020. Neither the employer, nor the employee needs to have previously used the CJRS.
As before, the scheme applies to all UK employers (although the Government expects that publicly funded organisations will not use the scheme) who have a PAYE payroll scheme, which is enrolled for PAYE online (this can take up to 10 days), and have a UK bank account.
The employer can claim under the scheme in respect of the following employees:
Key Points to Note
As before, all employers should ensure that they agree the furlough arrangements (whether full or flexible furlough) with each employee and confirm the terms agreed in writing with the employee. Whilst the guidance indicates that you do not need the employee’s express agreement in writing, best practice dictates that you should ask them to sign and return the written furlough agreement or confirm by return e-mail that they agree to the terms of the furlough arrangements. Employers should keep a copy of the agreement for five years.
It is advisable to agree a period for which the full or flexible furlough arrangement will be in place and for this arrangement to be reviewed towards the end of the period. It is advisable to initially set the furlough period until 31 January 2021, as the scheme will be reviewed then. Whilst we do not know what this means, it is likely to shift a greater cost burden onto employers.
The arrangements can be amended in accordance with the work available to allow the employer the best use of the scheme, however the employer should ensure it keeps note of the hours worked and hours on furlough for each claim period or risk having to pay back the grant.
Employers should be cautious to not use discriminatory criteria when selecting employees to use the full or flexible furlough scheme or come back to work full time.
It is possible to retrospectively put in place furlough agreements to have effect from 1st November, but only where such agreements are in place on or before 13th November 2020.
The Government continues to encourage employees to report Employer fraud. From December 2020, the Government has also confirmed that HMRC will publish the names for companies (including LLPs) and the company registration number of those who have made claims under the scheme from December onwards. This confirms that the Government continues to crack down abuse. The government publications list could have two impacts. As well as tackling abuse it is likely to deter some employers (particularly the larger employers) to use the extended furlough scheme to save money.
Consider your workforce arrangements. If your operations continue to be impacted by COVID-19, whereby there is not enough work available for staff, use the extended furlough scheme as a means of retaining your workforce.
We may find that further guidance is issued in due course that changes the rules so watch this space!
Ross Meadows – Partner
Employment and Immigration
Cacy-Leigh Neilson – Associate Solicitor
Employment and Data Protection
Disclaimer: This note does not contain a full statement of the law and it does not constitute legal advice. Please seek legal advice if you have any questions about the information set out above.
Copyright © 2013 - Oury Clark.