Furlough scheme extension: business as usual for employers
Wednesday’s Budget brings a further extension of the Coronavirus Job Retention Scheme, better known as furlough, which is now set to run until the end of September 2021.
The format of the scheme will by now be familiar to employers and employees alike, continuing to cover 80% of employees’ wages for the hours they do not work, up to a cap of £2,500 per month.
For the next few months, employers will remain in their present position of only needing to pay pension and national insurance contributions. However, from summer onwards, the ‘tapering’ of the scheme originally intended to come in last autumn will be introduced. Starting in July, employers will need to contribute 10% towards the wages of their furloughed employees, expanding to 20% in August and September, with the Government contribution scaling back accordingly.
In line with the previous extensions, the eligibility date upon which furloughed employees must have been employed will shift. For periods of furlough from 1 May 2021 onwards, employees must have been employed as at 2 March 2021, as long as a PAYE submission has been made to HMRC between 20 March 2020 and that date. For periods prior to this, the eligibility cut-off date remains 30 October 2020. The Government will confirm later the reference date for usual hours and pay for claims past 1 May.
Claims for furlough days in February 2021 must be made by 15 March.
Further detail from the Government is awaited, but many of the other features of the scheme are expected to remain the same:
• “Flexible furlough” agreements are permitted, meaning employers can furlough employees for part of their hours. Such agreements permit employees to work for any amount of time in any work pattern, as long as the furlough claim is only for the hours that they are contracted to work but do not do so.
• Employers remain obliged to keep written records confirming that employees have agreed to be furloughed, so written agreements with employees should be put in place as soon as possible. They should be made subject to any new Government guidance which is issued after they were completed.
• The Job Retention Bonus and Job Support Scheme announced last year remain on hold until the furlough scheme comes to an end.
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