Furlough scheme extension – key points for employers

Posted on January 29, 2021
Posted by Frankie Mundy

furlough scheme extensionIn a series of announcements made in conjunction with the implementation of a second national lockdown, the Government extended the Coronavirus Job Retention Scheme (or furlough scheme as it’s commonly known) beyond its original expiry date of 31 October 2020. The furlough scheme extension means that employers affected by the coronavirus pandemic will now be supported to keep their staff through the winter. The scheme extension was initially intended to close on 31 March 2021, but the Government confirmed in December 2020 that it will remain open until 30 April 2021.  



Furlough scheme extension from 1 November 2020

We’ve summed up the key points employers need to know about the furlough scheme extension from 1 November 2020. For more detailed guidance and template documents to make the necessary arrangements to place your staff on furlough, see our Q&A


1. Grants under the scheme have gone back up to 80%

Whilst the previous iteration of the scheme was being phased out from August 2020, with grants being gradually reduced, from 1 November 2020, the grant available to employers for furloughed workers’ wages has gone back up to 80% of their normal pay. The original cap of £2,500 per month has also been reinstated, which is proportional to the hours not worked by furloughed staff. 


2. Employers must pay pensions and national insurance contributions

Under the previous furlough scheme, pensions and NI contributions only began to be payable by employers from 1 August 2020, but under the scheme extension employers are responsible for paying these contributions from 1 November. 


3. Staff can be furloughed on a full-time or flexible basis

Employers are free to agree any working arrangement with their staff from 1 November 2020, whether that be full-time furlough (eg because their business premises have been forced to close during the second lockdown) or part-time, flexible furlough. Staff must be paid as normal for any time that they work, but employers can claim the Government grant towards staff members’ wages for time they are on furlough.


4. Staff do not need to have been furloughed before 

Under the previous rules, from 1 July 2020 when flexible furlough was introduced, only staff who had previously been furloughed could continue to be placed on furlough leave. That’s all changed under the scheme extension. From 1 November 2020 there is no requirement for employers to have used the scheme before or for the staff member in question to have been furloughed before. 


5. Staff must have been on the payroll on 30 October 2020

To be eligible, staff must have been on an employer’s payroll on 30 October 2020. There is an exception if staff were on the payroll on 23 September 2020 but then stopped working for their employer; if they are re-hired they can be placed on furlough, provided an RTI submission was made for them between 20 March and 30 October 2020. The same applies for staff on fixed-term contracts which expired on or after 23 September 2020.


6. Furlough arrangements need to be confirmed in writing with staff

As before, employers will need to get their staff member’s agreement to being placed on furlough, because it requires changes to be made to their employment contract. They also need to confirm in writing that their staff member has been furloughed. Use our template agreement to put in place a furlough agreement customised to your arrangements. You’ll need to keep a copy for 5 years.


7. There’s no limit to how many staff you can claim for during the extension

Unlike under the previous flexible furlough scheme when (from 1 July) you could only furlough as many people as were furloughed in any one period prior to 30 June 2020, under the scheme extension there is no limit to how many people employers can claim for in each claim period. 


8. Claims need to cover a minimum period of 7 days

Although there’s no minimum furlough period, when employers make their claims they need to cover a minimum period of 7 consecutive calendar days.


9. Claims must be made within 14 days

Employers have 14 calendar days from the end of the month they’re claiming for to complete their claim. Eg, claims for January 201 need to be submitted by 11:59pm on 15 February 2021. 


10. Furlough grants can cover statutory notice periods until 30 November 2020

If you make your staff redundant whilst they are on furlough leave, you can continue to claim furlough grants for them during their statutory notice period, but you can’t use the grant money to pay their redundancy payments. No guidance has been published about whether contractual notice periods can be claimed for too. Importantly, from 1 December 2020, businesses cannot claim for any notice periods (whether statutory or contractual). This includes redundancy, resignation and retirement notice periods. 


11. Shielding staff or those with caring responsibilities are eligible for furlough

The Government has confirmed that staff who are categorised as clinically extremely vulnerable or at high risk from severe illness (ie those who are shielding), or who are unable to work because they have caring responsibilities due to COVID-19, are eligible for furlough provided they meet the other eligibility criteria.


12. HMRC will publish the names of employers who have claimed on or after 1 December 2020

HMRC has begun publishing the names of businesses who claimed under the scheme extension on or after 1 December 2020.  From February 2021, HMRC will also publish the company numbers (if applicable) of businesses who have claimed as well as an indication of the value of the claims they have made. 

The content in this article is up to date at the date of publishing. The information provided is intended only for information purposes, and is not for the purpose of providing legal advice. Sparqa Legal’s Terms of Use apply.