Covid-19: Extension of furlough

The Prime Minister has announced that England will be entering into a national lockdown from Thursday 5 November until at least 2 December 2020. During the lockdown pubs, restaurants, gyms, non-essential shops and places of worship will close but schools and universities will stay open. People should work from home where possible but those industries where working from home is not possible, such as the construction and manufacturing industries, will be allowed to continue.

The Coronavirus Job Retention Scheme (also known as furlough), which was due to come to an end on Saturday (31 October 2020), will be extended in order to provide support to businesses and employees during the new national lockdown. It therefore remains available to businesses as of 1 November and will be open for the duration of the lockdown. The level of support available under the extended scheme mirrors that available under the furlough scheme in August, with the Government paying 80% of wages up to a cap of £2,500. Flexible furloughing is allowed under the extended scheme, as well as full-time furloughing. The Job Support Scheme, which was scheduled to come into effect from 1 November, has been postponed until furlough ends.

The formal press release outlines the eligibility rules governing the extended furlough scheme. It states that neither the employer nor the employee needs to have previously used the furlough scheme, and that it is available in respect of any employees who were on the employer’s PAYE payroll by 23:59 on 30 October 2020. Employers can claim the grant for the hours that their employees are not working, calculated by reference to their usual hours worked in a claim period. When claiming for furloughed hours, employers need to report and claim for a minimum period of seven consecutive calendar days. For hours not worked by the employee, the Government will pay 80% of wages up to a cap of £2,500, which must be paid to the employee in full. Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way. As previously, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.

We know that the extension of furlough will be welcomed by many employers who would otherwise have to make the difficult decision of making redundancies. As before, our advice is to consult with employees whom you wish to put on furlough and obtain written agreement from those affected. If you have any questions or need any advice about furlough or redundancy matters, please do not hesitate to get in touch with our employment law team.