Government agrees to extend furlough to March

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Key Points from the surprise announcement today:

  • The Job Retention Scheme has been extended to 31 March 2021
  • Employees made redundant after 23 September 2020 can be re-employed and furloughed.
  • Usual Wage calculated by reference to salary at 30 October 2020 but only for newly employed employees.
  • The Job Support Scheme is postponed.
  • The Job Retention Bonus (due to be paid in February 2021) has been cancelled.
  • Self Employed Income Support Scheme (SEISS) 3rd grant increased to 80% of trading profits for 3 months.

The furlough scheme (or Job Retention Scheme) has now been extended to the end of March 2021, it was announced at lunchtime today (5 November), and will apply throughout the UK.    The scheme will pay up to 80% of an employee’s wages up to a cap of £2,500 a month.  The extension of the scheme into November was confirmed last Friday,  but this extends the scheme for a further four months and at the same rates and conditions.  The Government will issue full guidance on 10 November.

https://www.gov.uk/government/publications/extension-to-the-coronavirus-job-retention-scheme/extension-of-the-coronavirus-job-retention-scheme

As noted when the extension into November was confirmed last week, the furlough scheme will operate in a similar way to the JRS in August 2020 (ie, employer can claim for 80% of usual wages for hours not worked but must contribute fully towards employer’s national insurance and employer’s pension contributions).

The Government has also confirmed that anyone made  redundant after 23 September 2020 (when the replacement Job Support Scheme was first announced) could be re-hired, at the employer’s discretion, and be furloughed.  This was a similar situation to what happened when the JRS was originally announced back in March.

The guidance states that the basis of the claim (the ‘usual wages’) for employees that were employed on or before 19 March 2020 remains their pay at that date.   For new employees hired between 20 March and 30 October , the calculations of their furlough rate will be based on thei pay period immediately prior to 30 October or, for staff on variable hours, average earnings from start of employment to start date of furlough.

The government has also confirmed that the Job Support Scheme has been further postponed and that the Job Retention Bonus (JRB) will now not be paid in February 2021 and has been cancelled.

The Self-Employed Income Support Scheme (SEISS) will also be increased and the claim for November 2020 to January 2021 will now cover 80% of prior average trading profits.  This level of support is similar to the first grant claim that was claimable in June 2020.  This had been increased last Friday to cover the equivalent of 55% of three months trading profits but, in line with the extension of the furlough scheme, this has now increased to a full 80%.   This is expected to be claimable from early December.