Furlough Extension – what are the plans?

The Chancellor has announced that the Coronavirus Job Retentions Scheme (the Scheme) will be extended from 30 April 2021 until 30 September 2021.

Background

The Scheme was set up in March 2020 in order to provide financial assistance to businesses and employees who were unable to work due to the effects of Covid.

According to the most recent figures, since March 2020, 11.2 million jobs have been supported by the Scheme and there are approximately 4.7 million people currently on furlough leave. 4 out of 10 employers are currently utilising the Scheme and it is no surprise that the hospitality industry has had the highest number of employees on furlough leave.

What are the extension plans?

Furlough has been extended several times as the management of the coronavirus pandemic has evolved. Most recently the Scheme was due to end in April 2021 but with the Government’s roadmap outlining that all businesses may not open fully until 21 June, at the earliest, it became clear that further support would be needed to assist businesses as they reopen.

Under the plans to extend furlough, the Scheme will provide financial support on a sliding basis.

• Currently the Scheme will continue to support up to 80% of an employee’s salary for the hours they can’t work, up to a maximum of £2,500 per month.
• In July the Scheme will contribute 70% and employers will have to pay 10% of the hours an employee cannot work.
• For August and September, this will reduce to 60% furlough support and 20% employer contribution for the hours not worked.
• The Scheme will then close after 30 September.

At all stages employers will need to continue to pay pension and National Insurance contributions.

Who can be placed on the furlough scheme?

Anyone can be furloughed whether they are on a full-time, part-time, agency, flexible or zero-hour contract. It does not matter if the employee has not been furloughed before however they must have been on the employer’s payroll before the extension was announced (3 March 2021).

What can an employee do while on furlough?

While an employee is on furlough they can take in other jobs, as long as they do not break the terms of the contract. The employee can also take part in training, or volunteer for an unconnected organisation.

Are employment rights effected by furlough leave?

No, employment rights are not effected (save for arrangement to reduce pay to 80%). An employee who is placed on furlough leave remains an employee and their continuity of service is not effected.

They will continue to accrue their statutory and contractual rights (unless varied). This includes their right to annual leave (paid at 100% of their salary) which they will be entitled to carry over the company holiday if they are prevented from taking their leave due to the effects of Covid.

If you would like advice on any aspect of the furlough scheme please contact either Nick Smith or Laura Tennet of the Mincoffs Employment Team on 0191 212 7773 or by filling in the form below.