13 Nov 2020
First published 31st March 2020. Last updated 13th November 2020.
On 5 November 2020, it was announced that the Job Retention, or furlough, Scheme was to be extended to 31 March 2021. Below are some key FAQs concerning what we currently know about the extension.
We’ve opened our HR helplines to give employers affected by COVID-19 access to a free advice call. So, for fast answers to questions on furloughs, lay-offs and the Job Retention Scheme, speak to an expert today on 01455 858 132.
The Job Retention Scheme (JRS)
What is furlough leave and the Job Retention Scheme?
Its the government’s scheme that will pay most of an employee’s wages while they are on furlough leave. But what exactly is a ‘furloughed employee?’
Normally, an employee on furlough takes a period of temporary leave and receives no pay. They stay on your books, and you can bring them back in when you need them.
The furlough leave government announcement is called the Job Retention Scheme. And, if you need to furlough employees due to the COVID-19 crisis, the “no pay” element will be overridden and the government may cover 80% of your employees’ wages up to £2,500 per employee per month.
Why was the scheme extended?
Originally launched in March 2020, the furlough scheme was expected to end on 31 October 2020, to be replaced by a new scheme, the Job Support Scheme, from 1 November. However, as a result of recently announced national lockdown restrictions in England, the furlough scheme has been extended across the UK and the Job Support Scheme postponed indefinitely.
How does the extended scheme work?
Like before, you place staff on a period of ‘furlough’, meaning they do not work at all, or work less hours than usual, but are retained on your books. This is an alternative to making staff redundant.
From November, the government then pays 80% of their wages, up to a cap of £2,500 per employee per month. You do not have to top up their wage, meaning that if an employee is placed on ‘full furlough’ and does no work for you, all you will need to pay is National Insurance and employer pension contributions.
Employees can work part-time whilst furloughed, otherwise known as ‘flexible furlough’, however you will need to pay them in full for the time they work.
How do I claim the grant?
When claiming the grant for furloughed hours, you will need to report and claim for a minimum period of 7 consecutive calendar days. As before, claims can be made through the government website.
Which companies are eligible to use the scheme?
All employers with a UK bank account and UK PAYE schemes can claim the grant. From November, you will not need to have used the furlough scheme before.
Do I need to have furloughed employees before?
No. From November, employees can be furloughed for the first time provided they meet other eligibility criteria.
Which employees can be furloughed?
To be eligible to be claimed for under this extension, employees must be on your PAYE payroll by 23:59 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.
Furloughed workers can include agency workers, office holders (including company directors) and salaried members of Limited Liability Partnerships (LLPs).
The government are currently considering whether employees who are serving a notice period should be allowed to be furloughed. This change is currently expected to come into effect from December.
Do employees need to agree to be furloughed?
Yes. In all cases, you should discuss the situation with employees and agree with them that you are designating them as a furloughed worker, either under full furlough or flexible furlough.
What if I have already agreed to place staff on the Job Support Scheme?
As the Job Support Scheme has been postponed, you should now re-visit those agreements to confirm to employees that, during their nonworking hours in November and for as long as the extended JRS lasts, or until working conditions change, they will be classed as being on furlough under the JRS, rather than the Job Support Scheme, and the payment arrangements of the extended JRS will apply. The overall result of this is that employees will receive a higher rate of pay under the JRS.
Can employees do any work during furlough?
Previous rules outlined that employees were prohibited from providing services to you, or an associated organisation, that generated revenue whilst furloughed. This means that, if furloughed employees are asked to conduct work, they need to be paid in full for it and the hours they work not included in any claim for the government grant.
These rules continue to apply, meaning that employees can obtain work with another employer when they are on furlough with you provided that their employment contract allows for it.
Can furloughed employees take annual leave from November?
Guidance has confirmed that annual leave will operate in the same way as under previous furlough rules. In other words, annual leave continues to accrue during furlough and that employees should be paid in full for their leave. This means that, should the old rules apply, you will need to top up holiday pay for furloughed workers by 20%.
Expert HR advice
The situation in the UK is changing fast, so keep checking the GOV.UK website for the latest guidance.
In the meantime, to get specialist advice on how to furlough employees and manage the impact of COVID-19 on your business, call our HR advice line for free on 01455 858 132.
Disclaimer: This blog was updated on the 13/11/2020. As the situation in the UK is developing rapidly, always remember to check in with your HR adviser or the gov.uk website for the latest updates.
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