Last updated: 17 December 2020

The extension is intended to provide certainty to employers so allowing a degree of planning for the future. The extended furlough scheme will operate in a similar way to the previous scheme. The government will pay 80% of wages up to a cap of £2,500 a month for the hours not worked. It now appears that the review of the scheme previously announced to take place in January 2021 may not take place, and we will keep watching for any announcements. Flexible furlough will continue to be allowed as will full-time furlough. 

An employer can claim for employees who were on the employer’s PAYE payroll by 23:59 on 30 October 2020 and for whom a Real Time Information (RTI) submission was made to HMRC between 29 March 2020 and 30 October 2020. There will be no gap in eligibility for support between the previously announced end-date of the furlough scheme and this extension. For claim periods starting on or after 1 November 2020, employers can claim from 11 November 2020. 

Because of this extension, the Job Retention Bonus which was to have been paid in February will now not be paid. A retention incentive will be redeployed at the appropriate time.

What should employers do now?

• Identify those employees who are to be furloughed and obtain their written agreement to the extension.
• Those employees for whom redundancy consultation has commenced, consider whether, with an employee’s agreement, redundancy proceedings can be deferred and an employee placed on furlough. This is a complex area and you are advised to seek advice before proceeding.
• Review the implications on your business of the extension to furlough.