In view of the second lockdown in the UK, the Chancellor Rishi Sunak announced on 5 November 2020 that the Furlough Scheme will be extended across the UK until the end of March 2021. The scheme will continue past its deadline of 2 December 2020 to give businesses security through the winter and protect millions of jobs.
As part of the revised scheme, anyone made redundant after 23 September 2020 can be rehired and put back on furlough. For the last few months, the government has been working on reducing the furlough scheme and eventually replacing it with the Job Support Scheme The Job Support Scheme which was due to be introduced in November 2020 to replace the furlough scheme provides a reduced form of support to the employer. This scheme has now been postponed.
1. How does the UK's new furlough scheme work?
2. How can you apply?
3. What's going to happen on December 2 when the lockdown ends.
How does the UK's new furlough scheme work?
Anyone working in a full-time job (or on a PAYE basis) on 30 October 2020 can be furloughed. This includes people on zero hours contracts or those working flexibly. HMRC has clarified that companies can rehire employees who were made redundant after September 23 (the qualifying date for the Job Support Scheme), and they would qualify for the scheme. Employers are set to receive more support from the government. For more information click here.
Employers were informed that from October 2020 they should top up furloughed wages by 20 per cent, while the government paid 60 per cent. Under the new rules, the government will now go back to paying up to 80 per cent of people’s wages, up to a maximum of £2,500 per month.
While the government updates the system to take account of the new furlough scheme, employers can submit their wage claims to the government, and obtain a refund subsequently. Once the new furlough scheme is fully operational, employers should expect to receive their payments upfront.
Implications for employees - Being placed on furlough is similar to gardening leave. The employee will still be paid by the employer and will still pay taxes from their salary. However, the employee will not be able to continue working for the employer for the duration of the furlough. In this case, your employee would effectively be paid not to work until the end of March 2021.
Employees should note that there is no guarantee that the employer will keep them on after the scheme ends and that if they are furloughed, an employee will not qualify for 80 per cent of their salary if they earn more than £2,500 per month. In that case, an employer could choose to “top up” the employee’s salary, or the employee could be eligible for support through the welfare system.
If the employee receives a regular salary from their employer, the 80 per cent should be calculated based on the employee’s actual salary before tax (their gross salary).
How can you apply?
Any UK employer, including businesses, charities, agencies, and public authorities can apply to the scheme to temporarily cover an individual’s salary. Employees have to agree to be put on furlough. An employee cannot apply by themselves.
There is no requirement for the business to be considered “essential” in order to access the scheme. It is also not necessary for employers to show that they are suffering any sort of financial hardship. If employers are already receiving public funds, they are expected to use them to cover the employees costs rather than also applying for the furlough scheme.
For more information on applying for the Furlough Scheme, click here.
What's going to happen on December 2 when the lockdown ends?
As of 5 November 2020, the Chancellor has extended furlough provisions to cover 80 per cent of an individual’s salary until the end of March 2021. This has been extended well past the current lockdown end date of 2 December 2020.
After furlough ends in March 2021, it is not clear whether the government will decide to revisit the Job Support Scheme, a far less generous support scheme. Your expert specialist employment solicitors at Pure Business Law will keep you updated.
How can Pure Business Law help?
We are specialist Employment lawyers based in Bedford and operate nationally.
If you need advice on the “furlough” scheme and how this may affect your business, assistance with reviewing your contracts of employment or preparing letters or other communications to your staff, call our fixed fee specialist employment law solicitors on 01234 938089. Alternatively you may e-mail us at firstname.lastname@example.org and one of our expert employment solicitors will be in touch.
Our expert fixed fee employment solicitors are waiting for your call.