The furlough scheme has now been extended until 31st March 2021. This is to increase financial support for businesses and workers during Lockdown #2 in England.

The furlough scheme subsidises the wages of people who can’t do their jobs, either because their workplace is closed, or because there is no longer enough work for them. Through the scheme, the government commits to cover 80% of the wages of ‘furloughed workers,’ up to £2,500 per month.

Will it be any different from the original scheme?

The scheme is back to how it was at the beginning. Where businesses have had to top up furloughed wages by 20%, with the government paying 60% in recent months, the government will now cover the full 80% (up to £2,500 per month), with the employer only covering pension and national insurance contributions until January. Before January it will be reviewed by the government and they may employers to contribute more.

Since July, employers have been able to bring back employees part-time, and furlough them for the rest. This will continue, you can still flexible furlough.

Which employees are eligible for the scheme?

To be eligible for this extension, employees must have been on the payroll by 30 October 2020, but they don’t need to have been furloughed before. Anyone made redundant after 23 September, can be rehired and put back on furlough.

The scheme can cover:

• Full-time employees
• Part-time employees
• Employees on fixed-term contracts
• Employees on flexible or zero-hour contracts
• Agency workers
• Apprentices
• Company Directors
• Salaried Members of LLPs

What are the requirements of furloughing an employee?

An employee can be furloughed if:

• The employee has been instructed by you to cease all work in relation to their employment
• The reason for the instruction to cease work was due to circumstances of the coronavirus
• The employer and employee must have agreed in writing that the employee will cease work. The agreement can be made via email.

To furlough a member of your team, follow our step by step guidance.

Can I top up my team wages to 100%?

Yes – you can but there is no obligation to do so. Whether you intend to furlough on 80% or to top up out of your own budget should be made clear to the employees when seeking their consent for furlough.

Is there a maximum number of claims I can make under the updated scheme?

Yes, the number of employees in a single claim period can’t exceed the maximum number of employees you have previously claimed for before 30 June 2020. For example, if you made a claim for 5 employees in March, 15 employees in April and 12 employees in May, the maximum number of employees you can now claim for in any single claim period is 15 employees.

How to make the calculations

HMRC have now released their calculator to work out the furlough claims for individual employees.

It has been clarified that if someone was on payroll on 19 March 2020, you use their salary at that date to calculate the furlough claim for November onwards. This is regardless of whether they have been furloughed previously and if their pay has been reduced or increased after this date. If they weren’t on payroll on 19 March 2020 and were employed at some time between 20 March and 30 October, then you use their salary from the RTI submission on or before 30 October 2020.

Holidays while on furlough

You can’t put an employee on furlough just to cover their holiday. However, a furloughed employee can request a holiday in the normal way. If approved, each day of the holiday while they’re on furlough should be topped up to their normal daily pay. This includes any bank holidays over the Christmas period.

When can we make a claim and how?

We’re waiting on further guidance on this. However, the government have confirmed that there will be no gap in support between the end of the previous CJRS scheme and this extension.

Our advice

Think about what your business will need throughout Lockdown #2 and beyond. This will be helpful in directing you in what to do next. There are likely to be three categories your team will fall into:

• People who will have work to do in your business when the furlough scheme ends;
• People with no prospect of work in your business for the foreseeable future;
• People with no prospect of work, but they are so talented and such a good culture fit that you’ll find a role for them

As leaders, we’ll be remembered for how we looked after our people at this time. By starting to plan now, it gives you time and space to do this right.

What other support can I get?

Businesses can also get:

• Up to £3,000 per month under the Local Restrictions Support Grant if their premises is forced to close
• £1,500 for every out-of-work 16-24-year-old given a ”high quality” six-month work placement
• £2,000 for every under-25 apprentice taken on until the end of January, or £1,500 for over-25s

The Job Retention Bonus of £1,000 per employee retained by a business has been removed to be replaced in time with a possible “retention incentive”. No further details have been provided yet – we’re sure Rishi will get back to us.

Under the latest instalment of the UK-wide Self-Employment Income Support Scheme (SEISS), self-employed workers will receive 80% of their average trading profits for November. This has doubled the support to the self-employed from 40% of trading profits to 80% for November. SEISS is calculated over 3 months so this increases the total grant from 40% to 55% of trading profits for November to January and the max grant increases to £5,160.

What happens when lockdown ends?

The government has indicated that furloughing will end in March, however, this again could change. When it does end, regions will then be classed into tiers as before, based on their coronavirus risk level, and the Job Support Scheme will kick in.

What happens if I need some help?

At Wow, we can help you with calculations and work out how much you will pay and recoup in different scenarios. We can also help run your payroll and submit your furlough claims.

You should still get HR advice for your own situation. If you are a Wow client, you have access to our free HR helpline. If you need the details again, please let us know. If you’re not, we can put you in touch with a HR consultancy.