By David Reid, Director.
Yesterday afternoon, the Chancellor of the Exchequer announced that the Coronavirus Job Retention Scheme (Furlough Scheme) will be extended throughout the UK, through to the end of March 2021. This measure is intended to provide businesses with a higher degree of certainty over the winter period.
The fundamentals of the scheme remain the same: the government will pay a grant covering 80% of employees’ wages for hours not worked, up to a cap of £2,500 per month.
Until 31 January 2021, an employer will only have to pay employer’s National Insurance contributions and auto-enrolment pension contributions for unworked hours, mirroring the arrangements that were in place in August 2020. Employers may be asked to pay a contribution towards wages in February and March 2021, if it is judged that UK economic circumstances have improved enough to allow this.
It remains possible to have employees fully furloughed or on flexible furlough, and employers may switch employees between these two options from time to time. It also remains the case that employees and employers who have not used the furlough scheme before can now do so for the first time, provided the employee has received a PAYE payment from their employer, notified to HMRC, on or before 30 October 2020.
Employees whose employment terminated after 23 September 2020 can be re-employed by their employer to take advantage of the furlough scheme extension. Employers should be aware, however, that staff who are re-employed in this way may retain their continuity of employment – meaning that a fair reason for dismissal and a fair process may be required if it is intended to make them redundant again at the end of the furlough scheme.
VERY IMPORTANT: It will be possible to backdate an agreement to go onto the extended furlough scheme to 1 November 2020, but any such retrospective agreement must be in place by 13 November 2020. We can support our retained clients to ensure that retrospective agreements are in place by this deadline.
Further, employers will not now be eligible for the £1,000 Job Retention Bonus but this might be re-activated once the furlough scheme eventually ends.
You can read the HMRC policy paper on these changes here: https://www.gov.uk/government/publications/extension-to-the-coronavirus-job-retention-scheme/extension-of-the-coronavirus-job-retention-scheme
Further details and guidance on the scheme will be published on 10 November 2020, following which we will provide our retained clients with a full support pack by the end of next week.
If you have any questions in the meantime, please contact us on 0141 331 5150.