What do You need to Know About the Extended Furlough Scheme Guidance?

HMRC has come up with detailed guidance on the furlough scheme, the Coronavirus Job Retention Scheme, which was declared by the Chancellor of the Exchequer last week.

Highlights

• The furlough scheme has been extended until 31 March 2021.
• A review is planned for January on the extended CJRS, where the level of employer contributions may be increased.
• According to this extension, the government will be responsible for the payment of 80% of employees’ usual salary, up to a maximum of £2,500 per month, for hours not worked by employees until 31 January 2020. Employers will be responsible for paying only pension and national insurance contributions.

Key Changes

• Neither the employee nor the employer needs to have previously used the CJRS to access the extended scheme. Now, this is a substantial change to the original CJRS, where the employee had to have been laid off for about three consecutive weeks to enjoy continued access to the scheme.
• From 1 November, there is no limit to the number of employees a company can claim.
• The new guidance also confirms that employers can furlough employees who cannot work as they have caring responsibilities resulting from COVID-19, such as taking care of their children, or are or at the highest risk of severe illness or clinically extremely vulnerable.
• According to the original CJRS, a new employer can claim for employees of a former business transferred if the PAYE or TUPE business succession rules apply. This was applicable if the employee was employed by the former employer on or before 30 October 2020 and transferred to their existing employer on or before 1 September 2020. This could be an error and may refer to either “on or after 1 September” or a “1 November” date.

Notably, while employers can continue to claim for laid-off employees serving a statutory notice period, the ‘check which employees you can put on furlough’ guidance suggests that the government is reviewing whether to include employees serving statutory or contractual notice periods. The government will change the approach for claim periods starting 1 December 2020, and the guidance for the same will be published in late November. While it is not conclusive, it appears that the government wants to discourage employers from accessing the scheme for employees serving notice, presumably to prevent companies from terminating employment or to use the scheme for subsiding notice payments.

Written Agreements

The following written agreements to furlough are needed:

• All employers need to confirm in writing to the employee that they have been laid off and keep this written record for five years.
• Employers can retrospectively lay off employees with effect from 1 November 2020. However, the retrospective agreements should be entered into on or before 13 November 2020.