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12 November 2020

Rishi Sunak extends the Furlough Scheme until Spring 2021 – Key Points

3 mins

In the wake of the second national lockdown in England, on 5th November 2020 Chancellor Rishi Sunak announced a further extension to the Coronavirus Job Retention Scheme (the ‘furlough scheme’) until 31 March 2021, in a continuing effort to help businesses and protect employees through the COVID-19 crisis. Further guidance on how to claim for the extended furlough scheme was released on 10th November 2020. 

Keeping up with the dynamic and evolving developments in the government’s response to COVID-19 can be difficult. To help, we have set out below a summary of the key things that businesses and employees need to know about the extended furlough scheme:

  • Employees can receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. This matches the first iteration of the furlough scheme announced in March 2020. Employers only need to pay National Insurance and pension contributions.  
  • Employers across the UK can claim furloughed salary for their employees, whether their businesses are closed or open. Businesses can continue to operate flexible furlough arrangements, with employees working reduced hours and receiving furloughed salary for unworked hours.  
  • An employee does not have to have been furloughed previously to be eligible under the new extended furlough scheme.
  • In order to be eligible to claim under the current extended scheme, an employee must have been on an employer’s payroll on 30 October 2020. Further, the employer must have made a “PAYE Real Time Information” submission to HMRC concerning the employee’s earnings between 20 March and 30 October 2020. 
  • Where an employee was on the employer’s payroll on 23 September 2020 but stopped working for the employer after this date (for example, they were made redundant) it is open to the employer to re-hire the employee and place them on furlough.  However, the employer must have made a PAYE Real Time Information submission to HMRC for the employee’s earnings between 20 March and 23 September 2020.
  • The employer must confirm in writing to the employee that they have been furloughed.
  • Employees retain their other statutory and contractual rights during furlough leave, including their right to statutory sick pay, annual leave, maternity and other parental rights, redundancy payments and rights against unfair dismissal, subject possibly to any further agreements made between the employer and employee.

From December 2020, the HMRC has stated that it will publish the names of employers who continue to claim under the extended furlough scheme. The employer’s Companies House registration number will also be published where applicable.

The government is set to review the policy in January 2021 to decide whether to adjust the employer’s contribution, whether employers will be required to contribute more will likely depend on how successful the current lockdown has been and if business are able to reopen. 

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