How the extended furlough scheme will work from 1 November 2020 

Following Boris Johnson’s announcement that the Coronavirus Job Retention Scheme (CJRS) will be extended until 31 March 2020, the Government has issued further guidance outlining how the extended scheme is intended to operate.  

Whilst the extended scheme follows broadly the same principles as the previous CJRS, the key differential points to note are:  

• Employers can agree retrospectively to furlough someone with effect from 1 November 2020, as long as this is agreed by 13 November 2020.  
• The Government will contribute 80% of wages for employees on furlough, up to a cap of £2,500, and the employer will only pay NI and pension contributions. This is due to be reviewed in January 2021 to see if employers should start contributing more towards the furloughed employees wage costs. 
• The Government is reviewing  eligibility to claim for employees serving contractual or statutory notice periods and it is stated that it ‘will’ change the approach for claim periods starting on or after 1 December 2020.  Further guidance will be issued at the end of November 2020. 
• Employers can claim for employees who were employed on or before 30 October 2020, if they have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020. 
• For employees that meet the eligibility criteria under the previous scheme, even if they were not furloughed, employers must use the pre-existing calculations for reference pay and usual hours. 
• For an employee who meets the criteria of the extended scheme but was not previously eligible for CJRS, an alternative calculation of reference pay and usual hours must be used. Broadly speaking, the pay is based on 
  
  – 80% of the wages payable in the last pay period ending on or before 30 October 2020 (for those on fixed wages),
  – or  80% of the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins for those on variable wages.
  
  
• If an employee is on flexible furlough, holiday is to be taken during “furloughed hours” and not “working hours”. 
• Employees should not be placed on furlough purely because they are taking a period of annual leave.  
• Employees returning from maternity leave need to give the statutory eight weeks’ notice to end maternity leave early in order to be furloughed. It was thought that employers could agree with the employee to shorten the notice period to be able to claim the grant but the latest guidance casts doubt on this approach. 
• If a furloughed employee becomes ill with Coronavirus, they must at least receive statutory sick pay (SSP). Employers can either move them to SSP or keep them on furlough but furlough is not strictly intended to cover short term absences. 
• Employees that have been made redundant can be re-employed and claimed for but they must have been on the payroll on 23 September and the employer must have made a PAYE RTI submission to HMRC from 20 March 2020 to 23 September 2020. This also applies to fixed term contract employees.