CORONAVIRUS – FURLOUGH SCHEME HERE TO STAY UNTIL MARCH 2021

 

In the House of Parliament today, the Chancellor of the Exchequer Rishi Sunak announced that the furlough scheme will be extended until March 2021.

The scheme has already extended on several occasions, most recently over the week to the backdrop of another national lockdown.

For this reason, few observers were surprised to hear this announcement, but it has sparked fears that lockdown (be it full national lockdown or local tier 3 lockdown) will be here until the end of the winter.

The extended version of the furlough scheme will operate along much the same lines as the previous iteration.

Some key features of note to employers in regards to the extended scheme have been recorded below:

    • All private employers are eligible to use the scheme, including those who have not yet used the scheme

 

    • Employees will be eligible for furlough if they were employed by 30 October 2020; a Real Time Information submission must have been sent to HMRC in respect of the employee between 20 March 2020 and 30 October 2020

 

    • The scheme maintains its flexible format, meaning that employees can still work at times and be furlough for the remaining period

 

    • For employees who have been furloughed before, the same calculation for reference pay and usual hours must be used

 

      • For employee who have not been furloughed before, new calculations for reference pay and usual hours must be used. This means:

 

Reference Pay and Usual Hours: the employee will be entitled to 80% of:

  • – If on a fixed salary, 80% of the wages payable on the last pay period on/ before 30 October 2020 (the reference point will be the last pay period ending on or before 30 October 2020)
  • – If on a variable salary, 80% of the average payable wages from 06 April 2020 or the start of their employment (whichever is later) and the day before their furlough period begins

 

  • Employees that were employed on 23 September 2020 (with a Real Time Information submitted in respect of the employee on or before this date) but have been subsequently been made redundant, may be re-employed and placed on furlough leave

 

    • Employees on furlough leave will retain their rights at work, including:
      o SSP
      o annual leave
      o maternity and other parental rights
      o rights against unfair dismissal
      o redundancy payments
      o to be paid at least statutory National Minimum Wage for hours worked

 

 

    • Employees can be furloughed because of health issues resultant from coronavirus or other conditions if the following applies:
         

        • are shielding in line with public health guidance (or need to stay at home with someone who is shielding)

       

        • have caring responsibilities resulting from coronavirus, including employees that need to look after children

       

    • The employer must meet any applicable employer pension and/ or NIC contributions, which is under review in January. A cap of £2,500 per month will remain in place.

 

    • Employers will need to meet the full cost of employment for any hours worked for employees on flexible furlough

 

 

The submission process will be very similar to the previous process under the furlough scheme and we will be able to attend to these submissions for clients.

If you are unsure if your employees qualify, or how the scheme works more generally, please contact one of our team for assistance.

 

Best wishes,

Alan

Alan Wright
Coronavirus Support Team
Switch Accountants