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Update! Changes to Extended Furlough

The Government today announced further guidance and changes to the extended Furlough scheme.

The main change is a further extension to the scheme, which Rishi Sunak confirmed will now be extended until the end of March 2021.

The further extension was made to provide businesses with greater support and security throughout the winter months.

What else do we know?

  • It was also confirmed that those who had been made redundant after 23 September 2020 could be rehired and placed on furlough.

  • The government will review the scheme in January 2021 to assess whether the economy is improving to a level where employers can be asked to increase their financial contributions.

What do businesses need to know about the extension? We’ve provided an updated summary guide below:

  • The scheme will be extended until the end of March 2021.

  • Employees will be eligible to receive up to 80% of their usual salary for the hours not worked, up to a maximum of £2,500 per month. This is more generous than the scheme had been in October and mirrors the level of grant available under the scheme back in August 2020.

  • The extended scheme is also more generous for employers than it was in October. With employers required to pay NI contributions and pension contributions for the hours not worked.

  • Employees can still be requested to work a proportion of their hours flexibly under the scheme or be placed on furlough full time.

  • Neither the employee nor employer needs to have used the scheme before.

  • Employers are still able to top up the employee’s salary payments above the scheme grant if they wish to do so

  • Work must not be conducted for the company during furloughed hours.

Which businesses are eligible?

  • Employers with a UK bank account and UK PAYE scheme.

  • Partially public funded organisations may be eligible where private revenue has been disrupted due to Covid-19.

Which employees are eligible?

  • Employees who were on the employers PAYE payroll by 23:59 on 30th October 2020 will be eligible.

  • Real time information payroll submissions notifying payment to HMRC for the employee in question must have been submitted on or before 30 October 2020.

  • All types of employment contract are eligible.

  • Employers will be required to obtain employee agreement to any furloughed hours or worked hours.

  • Employees who had been made redundant after 23 September 2020 could be rehired and placed on furlough.

  • Furlough can be claimed for a minimum period of 7 consecutive calendar days.

  • Worked hours will need to be reported and the usual hours the employee would have worked during the claim period.

  • Employees will be paid by their employer for any worked hours and the employer will be required to pay tax and NICs due on these salary payments.

The Job Support Scheme (JSS)

The JSS was due to replace the Furlough scheme from 1 November 2020. However, the introduction of this scheme has now been postponed until the end of the extended furlough scheme in December 2020.

For further advice on the extended furlough scheme, contact us or book a call for a free initial discussion.

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