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Furlough Leave Extended

Furlough Leave Extended
Richard Hiron Nov 02,2020
blog post

This year, Halloween perhaps did not shape up as many were expecting. Pumpkins were still carved and people still dressed up, but rather than large-scale parties, it was more a case of celebrating in their own homes with perhaps a few (i.e. a lot) of video calls instead.

For businesses with employees, 31 October 2020 was also not what was expected.

After weeks of getting their heads around the new Job Support Scheme, businesses learned that a new national lockdown would come into force from 5 November 2020 until 2 December 2020. They also learnt, however, that the Coronavirus Job Retention Scheme – better known as furlough leave – would be returning and in a manner that recalled its operation back in August. Meanwhile, the Job Support Scheme, which was due to start on 1 Noember 2020, has been postponed until further notice.

It has been confirmed that the new iteration of furlough leave will operate in a very similar way to the original style of the Scheme from earlier this year, with employers being paid the upfront costs so that they can continue paying their employees. Under this arrangement, employers will be able to claim 80% of hours not worked by their employees up to a monthly cap of 2,500.

In order to qualify, the employer must have a UK bank account and operate a PAYE Scheme. Additionally, the employee must have been on the employer’s Real Time Information (RTI) submission as at 11:59 PM on 30 October 2020.

All businesses will be able to claim under the Scheme, provided that the other eligibility criteria are met and, in addition to this, they will be able to arrange flexible working arrangements with their own employees along the same lines as the “flexible furlough” that has been seen of late (hence the government's contribution of 80% of hours not worked up to a monthly cap of 2,500).

Additionally:-

  • The legal terms of the Scheme will be updated, as will the portal for claiming the grant, meaning that there will be a period of time in which the grant is paid in arrears rather than as an upfront cost. The government should be publishing further guidance on this shortly;
  • Neither the employer nor the employee necessarily needs to have used the furlough leave scheme;
  • Publicly-funded organisations are expected to use their existing budgets for employment purposes rather than relying upon the Scheme. However, partially public-funded organisations may be eligible if their private funding has been disrupted. If this is the case, then they will need to meet the other eligibility criteria;
  • Employees can be on any kind of contract;
  • When calculating the grant that they are claiming, employers must do so by reference to an employee’s usual working hours (i.e. if an employee works 37.5 hours per week but cannot work any of them due to the restrictions or can only work some of them, then the employer must claim by reference to that portion of the 37.5 hours that cannot be worked due to the restrictions). The hours worked in the claim period and the usual hours that an employee would be expected to work will need to be reported by an employer when making a claim;
  • The minimum period of time that be claimed for is 7 consecutive days;
  • Employees will need to continue to be paid subject to their contracts of employment, meaning that employers will need to agree variations to an employee’s contract if they are not able to top up all or part of the remaining 20% of salary. Employers can choose to top up some or all of the remaining 20% of salary if they wish to;
  • Tax, National Insurance contributions and pension contributions will need to be deducted from salary as usual, which the employer will be responsible for doing;
  • The government does not anticipate that there will be any gap between claiming under the Coronavirus Job Retention Scheme as was due to end on 31 October and claiming under the amended Scheme.