Furlough scheme will be extended until 31 March 2021

Furlough scheme will be extended until 31 March 2021
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Furlough scheme will be extended until 31 March 2021
Following the announcement on 5 November 2020 that the furlough scheme will be extended until 31 March 2021, the full guidance for calculating and making claims has been released, by way of updates to the existing patchwork of guidance notes.

In essence, the existing structure of the scheme remains in place with the Government contribution reverting to 80% of an eligible employee's reference pay, subject to a cap of £2,500. However, there are some changes and points to note that we highlight below. This article is based upon our understanding of the guidance as released on 11 November 2020.

What Is the Deadline for Submitting Claims for the Period up to 31 October?

30 November 2020 is the last day that employers can submit or change claims for periods ending on or before 31 October 2020 (before the extension). What can be claimed will depend on the rules in place at the relevant time.

What Written Agreements Need to Be Put in Place?

It remains the case that employers must confirm to their employees (or reach a collective agreement with a trade union) in writing that they have been furloughed, or flexibly furloughed.  

For flexible furlough or furlough arrangements that started on 1 November 2020, written confirmation can be put in place retrospectively. However, the deadline to put in place any retrospective confirmation is Friday 13 November 2020.

If you have existing written arrangements in place for the period up to 31 October, you will need to review them and determine how they need to be updated to claim under the extended scheme. If you are furloughing employees for the first time, then you will need to new written arrangements in place. This should be done in a way that is consistent with employment law.

Which Employees Can You Claim For?

You can claim for employees who were employed on 30 October 2020, as long as a PAYE real time information ('RTI') submission was made to HMRC between 20 March 2020 and 30 October 2020.

It is possible to re-employ and claim for employees who have been made redundant or stopped working for their employer, provided that this employee was still on the payroll on 23 September 2020.

If you are claiming for a period that ends on or before 31 October 2020, the number of employees that you can claim for in any single claim period from 1 July 2020 cannot exceed the maximum number you claimed for under any claim ending by 30 June 2020. For claims made from 1 November 2020, there is no maximum number of employees that you can claim for.

What About Employees Who Have Been Made Redundant?

Employers can continue to claim for a furloughed employee who is serving a statutory notice period.  As before, grants cannot be used to subsidise redundancy payments.

However, it is important to note that the Government is reviewing its position on this with any change to be introduced for periods of claim starting on or after 1 December. Further guidance is expected in late November. This uncertainty will need to be reflected in any redundancy letters where employees are being placed on furlough during their notice period.

As before, for employees who are made redundant, their base statutory redundancy pay and statutory notice pay must be based on their normal wage rather than the reduced furlough wage.

What Are the Changes to the Way Employers Calculate Pay Reference Periods?

For employees who were employed on or before 19 March 2020, the method of calculating how much furlough can be claimed remains the same.

For employees who started their employment between 20 March and 30 October 2020, there are now new reference periods to be taken into account as follows:

  • For hours and salary that do not vary - their reference period will be the last pay period ending on or before 30 October 2020. These employees will only be eligible for periods starting on or after 1 November 2020.
  • For variable hours - the calculation for the average number of hours worked will be the average hours worked from 6 April 2020 and up to the employee's first day spent on furlough on or after 1 November 2020.
  • For variable pay - the calculation will require the average wages that were payable between 6 April 2020 (or the date their employment started if after this) and the day before they are furloughed on or after 1 November 2020.

Names Published

The new guidance states that all employers who claim under the scheme from December onwards will have their name and company registration number published. Employers will need to consider whether they wish to have that information in the public domain.

Work with BrooklandsHR for your human resources needs.

Get in touch and see how we can help you comply and succeed with your employees.

01752 914155
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