Partner Sue Dowling, head of leading law firm Blandy & Blandy's employment law team, discusses the winding down of the 'Furlough Scheme' and how the firm can help affected employers and employees.
With the arrival of February, we have now entered the final three months of the coronavirus job retention (“furlough”) scheme, which is set to end on April 30, 2021. The scheme had originally been set to end on October 31, 2020, before it was earlier extended until March 31, 2021.
As neither the employer nor the employee needs to have previously utilised the furlough scheme, employees who have not previously been furloughed can be put on furlough for the first time, on a part-time or full-time basis and with their consent, provided that the member of staff was on the employer’s PAYE payroll on October 30, 2020.
Between now and April 30, 2021, employers will also be able to keep employees on furlough (be it full or part-time furlough), and to place staff who have previously been furloughed but since returned to working back on furlough, again on a full or part-time basis. For example, as a result of the national lockdown and tightened restrictions.
Employers will need to report and claim for a minimum period of seven consecutive calendar days. It is crucial to remember that to place an employee on furlough leave, the employer should ensure that it has the employee’s written consent to go on leave and for any salary reduction that will apply as a consequence (i.e. typically only 80% of their normal salary).
Essentially the same arrangements will apply as did in August 2020. For the remainder of the scheme, the Government will continue to pay 80% of a worker's current salary for hours not worked, up to a maximum of £2,500 (gross). Employers will only be required to cover National Insurance (NI) and employer pension contributions. As per the previous furlough scheme, employers can decide to top up an employee’s wages.
Practically speaking, the planned job support scheme, which had originally been due to replace the furlough scheme, has been superseded by the extended furlough scheme.
The job retention bonus, a £1,000 one-off payment to employers who have brought back and retained workers for a minimum period (to be confirmed), may instead be replaced by a new “retention incentive” to be introduced at an “appropriate time”. The Government is yet to provide further details.
The chancellor has confirmed that a budget will take place on March 3, 2021, at which point he will "deliver the next phase of the plan to tackle the virus and protect jobs." No further extension of the existing furlough scheme, or changes to it, are currently planned.