Extended Furlough – Who’s Confused?

If you currently have furloughed staff and were relying on furlough to cover your payroll costs, then the cancellation of the scheme and the introduction of a brand new Job Support Scheme would have raised a few eyebrows.

Good news – Furlough has now been extended until March 2021. It’s all quite confusing, but we’ve tried to explain it below…

The ups and down of the furlough scheme

Furlough gave businesses the option of paying staff to stay at home, while also allowing them to work some part-time hours if required.

From the start, the scheme funded 80% of a furloughed employee’s salary, up to a ceiling of £2,500 – with the Government funding dropping by 10% each month from August onwards and employers being asked to start contributing the employer NI costs.

So, what’s happened to the scheme since?

The end of the furlough scheme – towards the end of the first lockdown, Rishi announced that the furlough scheme would end on 31 October 2020.

Job Support Scheme (JSS) announced – in October 2020, Rishi announced the brand-new Job Support Scheme (JSS) would kick off 1 November. The JSS would offer far less financial support (only paying out two thirds of the employee’s salary). This raised a few worries in the business community about the viability of the JSS as a replacement to furlough.

Job Retention Bonus (JRB) announced – as another incentive to keep employees on the payroll and avoid mass redundancies, the Government proposed a Job Retention Bonus. Qualifying businesses would be paid £1,000 for every previously furloughed employee that they kept on the payroll until 31 January 2021.

About turn! Furlough scheme extended – with local lockdowns increasing, and an England-wide lockdown coming, Rishi had to act fast. At the end of October, he announced that the existing furlough scheme would be extended beyond October until 2 December – with the JSS taking over after this date.

Furlough scheme extended until March – then on 5 November (remember remember), the Government extended the furlough scheme until March 2021, guaranteeing that the Government would cover 80% of an employee’s wages – as per the original scheme!

JSS and JBR both cancelled – as a result of this extension of the furlough scheme, both the JSS and the JBR have been effectively cancelled, ending months of speculation around how they would work, and whether they offered enough support.

Key points of the extended scheme

If you’re confused by all these changes, we don’t blame you! The key takeaway is simple – the furlough scheme’s back on.

These are some of the key points to be aware of:

  • You can claim under the extended scheme if you’re already making use of the scheme.
  • You can also claim if you’ve not yet used the scheme – new claims are allowed.
  • The 80% funding is guaranteed until January 2021, when the scheme will be reviewed.
  • Employees can be ‘flexibly furloughed’, meaning that your staff can be part-working and part-furloughed, to add some flexibility to your resourcing.
  • Previously, your employees must have been included on a Real Time Information (RTI) return submitted on or before 19 March 2020. This cut-off date has now been extended to 30 October, so more of your existing staff may be eligible for the scheme.

Talk to us about your payroll and furlough needs – If you’re still reading, and you want to know more. Get in touch with PennyBooks and we’ll let you know if you are eligible, we can also support you making a claim.

Book a call with one of our directors today!

James Watson