The furlough scheme that was due to conclude on October 31 has been extended to at least December. What happens to the Job Support Scheme that was to be introduced on November 1, well that has been paused for now.
The extension was announced on the same day it was supposed to end. One important difference from when the furlough scheme was introduced in March 2020 is that these measures will be “time-limited” starting on November 5 and ending for now unless that changes on December 2.
What this means is that employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500. Under the extended scheme, the cost for employers of retaining workers will be reduced compared to the scheme that officially concluded on October 31. This benefit of the extended furlough scheme is that it’s more generous for employers than it was in October i.e considering the furlough scheme had reduced to 60%.
Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time, and will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs.
Employers small or large, charitable, or non-profit, are eligible for the extended Job Retention Scheme, which will continue for a further month.
In terms of employee eligibility, the following will apply:
- To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
- Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.
- Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.
- When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
- Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
- For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
Further details will be communicated as they are released. For now, it’s a wait and see approach as to how this extension will alleviate the plight of business owners.