The Chancellor Rishi Sunak has confirmed that the furlough scheme, reintroduced by Boris Johnson on 31st October, will now be extended until March 2021. The scheme had been due to end on 31st October but was extended temporarily until 2nd December 2020. It will now continue through the winter until March 2021.
What does the grant cover and how much do employers have to contribute?
- Employees will continue to be entitled to receive 80% of their wages (subject to a cap of £2,500 per month) and may be continuously furloughed or placed on flexible furlough (working for part of their normal hours).
- Until January there will be no employer contribution to wages, other than employer National Insurance contributions and minimum auto-enrolment pension contributions (typically amounting to 5% of employment costs).
- The extension will be reviewed in January and it may be that employers are asked to contribute to wages at that point.
Who is eligible to use the scheme?
- In November, the scheme is open to any employer impacted by the pandemic, including those who have not previously used it.
- The Government has indicated that it will publish further details of which employers are eligible for support from December onwards, meaning there is likely to be a tightening of eligibility criteria. Further details are expected next week.
- Employees who have not previously been furloughed will now be eligible under the scheme, provided that they were on the employer’s payroll on 30th October 2020 and the employer made an RTI submission to HMRC in respect of the employee between 20th March 2020 and 30th October 2020.
- Employees that were employed and on the payroll on 23rd September 2020 (the day before the Job Support Scheme announcement) who were made redundant or stopped working afterwards can be re-employed and claimed for. The employer must have made an RTI submission to HMRC from 20th March 2020 to 23rd September 2020, notifying a payment of earnings for those employees.
Impact on the Job Retention Bonus
The Government has also announced that it will scrap the Job Retention Scheme Bonus, which was due to be paid in January 2021. The Bonus was to comprise £1,000 for each employee who had been on furlough and who was retained by their employer. Instead, the Government will put in place an alternative retention incentive, details of which are not yet available.
