New furlough guidance: analysis of the key changes
• The most significant change is that, from December 2020, HMRC will publish the names and company numbers of limited companies and LLPs that use the scheme. This is presumably an anti-avoidance measure but means that users of the scheme may receive unwanted publicity.
• It remains possible, at least for November 2020, to furlough employees who are serving their notice, but the government is considering outlawing this practice from as early as December 2020. Further guidance on this point will appear in late November.
No changes for now
• It was not clear whether employers would still to be permitted to voluntarily top up the 80% of salary provided by the furlough scheme, but the guidance confirms that they may continue to choose to do so at their own expense.
• After the original introduction of the scheme in March 2020, there was much uncertainty and debate about how furlough would interact with holiday entitlement. Fortunately, there have been no changes to the latest guidance on this topic, which was published on 13 May 2020.
Managing the transition
• Not all employers will have yet made their claims for October 2020 and the deadline for doing so is 30 November 2020. As the guidance makes clear, any claim from before November 2020 is subject to the rules that existed before the scheme was extended, and when the old scheme was being tapered. For example, employees could not be furloughed unless they had been furloughed before, and employers were required to make a 20% contribution.
• The new rules will apply to any claims for periods from 1 November 2020 onwards. It will now be possible to furlough employees who have not been furloughed before and employers will have to cover National Insurance and pension deductions, but they will not have to make any contribution to the salary of employees while they are on furlough.
• Employers can claim for new employees under the scheme so long as a PAYE submission has been made to HMRC in relation to each employee before 30 October 2020, or the employee has left employment after 23 September 2020 and has since been re-employed.
• The new guidance confirms that employers can backdate furlough agreements to 1 November 2020 so long as they are made before 13 November 2020. That is the end of this week and so urgent action is required from employers who want to rely upon this rule.