On 5 November, the Chancellor of the Exchequer, Rishi Sunak, announced that the Coronavirus Job Retention Scheme (“furlough scheme”) would be extended to 31 March 2021. On 11 November, HMRC provided updated guidance which sets out detailed information on the extended furlough scheme.
As outlined in our previous post, the furlough scheme will remain open for a further five months, until the end of March 2021. This means furlough will have been in place for a full 12 months by the end of the current extension. Under extended furlough, the Government will continue to pay 80% of wages up to £2,500 a month for those unable to work. All employers will have to pay for hours not worked are: (a) the cost of employer National Insurance Contributions; and (b) pension contributions. The extended furlough scheme will be reviewed in January 2021, to examine whether economic circumstances require employers to contribute.
We have outlined some key takeaways from the HMRC guidance below:
Who can employers claim for?
- From 1 November, there is no longer a limit on the maximum number of employees that can be claimed for by an employer under the furlough scheme.
- The guidance confirms that the extended furlough scheme is open for employees who were employed on 30 October 2020, as well as employees who were made redundant or stopped working on or after 23 September 2020 if they are then rehired.
- Employers can furlough employees for any amount of time and work pattern, while still being able to claim the grant for the hours not worked.
Key dates to bear in mind
Employers should bear the following dates in mind when claiming through the extended furlough scheme:
- The last date for submitting claims relating to periods up to and including 31 October 2020 is 30 November 2020.
- The last date for submitting a claim for the period of November 2020 is 14 December 2020.
- The last date to put in place a retrospective furlough agreement in order to backdate claims to 1 November 2020 is 13 November 2020.
The guidance provides a new monthly deadline for all claims going forward, which is 14 calendar days (or next working day) of the following calendar month, as outlined below:
|Claim for furlough days in (month)||Claim must be submitted by|
|November 2020||14 December 2020|
|December 2020||14 January 2021|
|January 2021||15 February 2021|
|February 2021||15 March 2021|
|March 2021||14 April 2021|
Updated guidance on redundancy and termination
- The purpose of the furlough scheme was to allow employers to maintain their workforce in the face of the operational impact of COVID-19. If redundancies are now made, these may well be subject to even greater scrutiny by employees in light of the extension of furlough. If redundancies are implemented nonetheless, it should be noted that the grant cannot be used for the purposes of redundancy payments.
- The guidance confirms that employers can still claim under the scheme for a furloughed employee who is serving a statutory period of notice. This was the case under the pre-1 November 2020 regime. It is not clear, however, whether employers can use furlough to cover contractual notice periods, and the guidance is contradictory on this point. It is hoped that the point will be clarified shortly.
- In any case, the guidance notes that the government is in the process of reviewing whether statutory and contractual notice should be claimed under the scheme and will change the approach on this for claim periods starting on or after 1 December 2020. Further guidance on this point is expected in late-November, but it seems likely that employers will be unable to claim furlough for notice periods post-30 November 2020.
- Furloughed employees will continue to accrue leave as per their employment contract. This is payable at the normal rate of remuneration (i.e. their pre-furlough rates). Employers may, therefore, need to top up furlough pay for any holidays days taken.
Drafting issues to note
There are some potential inconsistencies in this guidance which should be noted:
- In relation to TUPE, the guidance confirms that, for claim periods after 1 November 2020, a new employer is eligible to claim for TUPE transferred employees if the TUPE rules apply and the employees in question were employed by their old employer on or before 30 October 2020 and transferred to the new employer on or before 1 September 2020. At first glance, the 1 September date does not make sense, and it is more likely that this should have been drafted as 1 November 2020. Clarification is awaited.
- The guidance on extended furlough confirms that an employee can be moved from sick leave onto furlough. The position on sickness appears to remain unchanged, in that employers have a degree of flexibility on deciding whether ill employees should be on sick leave (potentially being entitled to SSP) or on furlough and entitled to furlough pay. However, wording in the guidance suggests that sick furloughed employees can only continue to be furloughed if they have previously been placed on furlough before 30 June 2020 and a claim submitted by 31 July 2020. It is not clear if this is an error, as there is no requirement otherwise under the extended furlough scheme for employees to have already been furloughed.
The official government guidance can be found below; there are ten detailed documents in total:
- Paying grants back
- Check if you can claim for your employee’s wages
- Other types of employees you can claim for
- Steps to take before calculating the claim
- Reporting employee’s wages to HMRC after claiming
- Calculating the claim
- Examples to help calculate wages
- Claiming for employee wages
- Check which employees you can put on furlough
- Check if your employer can use the furlough scheme – employee guidance
If you require any further information on the above or have any furlough-related queries or concerns, please contact your usual Mayer Brown contact.