BRM Coronavirus update – "Details of the extended furlough scheme"

6th November 2020

The Chancellor, Rishi Sunak, has today announced that the Coronavirus Job Retention Scheme (Furlough) will be extended to 31 March 2021.

Full guidance on the extended scheme will be published on 10 November 2020, but in the meantime, the following information has been confirmed.

Until January 2021, employees will receive 80% of their usual salary for hours not worked, up to a cap of £2,500 per month covered by the Government. Employers will need to cover National Insurance and pension contributions on hours not worked. The level of contributions will be reviewed in January 2021.

Employer eligibility

Employers across the UK can claim whether their businesses are open or closed.

Employee eligibility

An employee must have been employed and on the PAYE payroll on 30 October 2020. They do not have to have been previously furloughed to be eligible.

An employee can be furloughed if they are unable to work because:

  • They are shielding in line with public health guidance, or need to stay at home with someone else who is shielding;
  • Have caring responsibilities resulting from coronavirus, including the need to look after children.

If an employee was made redundant and stopped working for their employer but was on the payroll system on 23 September 2020, the employer can re-employ them and claim under the furlough scheme, but this is not compulsory.

Agreements

Employers must have confirmed to their employees in writing that they have been furloughed or flexibly furloughed in order to be eligible for the grant.

The agreement must be in writing and retained for 5 years. Details of how many hours employees have worked and were furloughed for need to be retained for 6 years.

An agreement can have retrospective effect from 01 November 2020 and will be valid for the purposes of the scheme. Employers only have the opportunity to put in place retrospective agreements until 13 November 2020. This is to ensure that employers have sufficient time to put in place their agreements without losing out on the cover of the scheme after the 31 October.

Specifics of the Scheme

The scheme is flexible and can be used to furlough employees on either a full-time or part-time basis. Employees can be furloughed for any amount of time or shift pattern. It does not matter what type of contract the employee is on.

If an employee was previously furloughed, the same calculations for reference pay and usual hours must be used. If an employee is new to the furlough scheme, different calculations for reference pay and hours need to be used, which will be confirmed on 10 November.

Employers will have to pay an employee’s wages as normal for hours actually worked.

Employers remain able to top up their employees’ wages if they wish, but there is no obligation to do so.

As with the previous furlough scheme, during any hours which the employee is designated as furloughed, the employee cannot carry out any work which generates money or provides a service for their employer. The guidance also states that HMRC will now publish details of employers who make a claim under the scheme. Further information on this is to be released on 10 November.

Employees may still take part in training, volunteer for another organisation or work for another employer while furloughed.  

Claiming under the scheme will operate as the previous furlough scheme did. Employers must report and claim for a minimum period of 7 consecutive calendar days.

Job Support Scheme and Job Retention Bonus

The JSS has been postponed and no longer applies.

The Job Retention Bonus will not be paid in February 2021 as originally planned but may be redeployed at the appropriate time in future.

If you require any assistance in drafting furlough agreements for your employees or have any queries relating to furlough scheme or employment law matters please speak to one of the employment law team at BRM on 01246 555 111.

Amy Hallam Head of Employment 01246 564 012 or email amy.hallam@brmlaw.co.uk

Ellie Leatherday Employment Solicitor 01246 564 002 or email ellie.leatherday@brmlaw.co.uk

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