As England entered into a second lockdown, the government abolished the (newly-created) Job Support Scheme and extended the Furlough scheme, until March 2021. 

The extended scheme has many similarities with the scheme first brought into place in March 2020, but a number of features, and possible developments, need to be born in mind.

Key Information on Extended Furlough

  • Under the Extended Furlough scheme the government will pay 80% of a Furloughed employee’s wages (capped at £2,500) for hours not worked. Employers can require employees to do some work, if they Furlough them on a flexible basis and pay their contractual wage for worked hours.  
  • At least until 31 January 2021, employer must pay the national insurance and employer pension contributions per Furloughed employee. From that date, the government may require employers to increase their contributions / payments under the scheme.
  • From 1 December 2020, employers may not bae able to use the Furlough grant to pay part of an employee’s notice pay (statutory or contractual). We await government decision on this point (which we hope will also clarify whether the prohibition is limited to notice pay where notice is given on or after 1 December 2020 only).
  • As the scheme was extended in a rush, employers were given the option of making claims going back to 1 November 2020, provided they reached an agreement with employees by 13 November 2020. Agreement reached after that date will not entitle employers to make backdated claims.
  • Also from December 2020, HMRC will publish the names and details of employers (companies and Limited Liability Partnerships) who have made claims under the scheme for the month of December onwards. This may be designed to deter certain employers from using the Furlough grant.

Steps for employers to consider

  • Due to the changes introduced in the extended scheme, it is advisable to review your Furlough agreement to ensure it provides you with the flexibility you may need as the scheme develops.
  • In some instances, the risk of not having to use the Furlough grant to cover part of an employee’s notice pay, may lead employers to bring forward potential redundancies.
  • Many businesses have learned important lessons from the first lockdown and aim to continue working and trading as much as possible. The option of flexible Furlough should therefore be taken on board, with appropriate and lawful selection and decision-making processes applied to minimise the risk of any claim by affected employees.