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Furlough Scheme Extension

Updated: Nov 5


On 31st October 2020, the government announced the extension of the Coronavirus Job Retention Scheme, also known as Furlough, until December 2020. They have now extended this further to 31st March 2021.


As a result of this extension, both the Job Support Scheme Open and Job Support Scheme Closed have been postponed.

Terms of extended furlough


The scheme rules will remain the same except where notified otherwise by the government.

Furlough is at the full discretion of the employer to use as they require.


For claim periods running to January 2021, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The £2,500 cap is proportional to the hours not worked. The government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.


The employer will receive payment upfront to cover the wage costs of employees who are claimed for under the scheme.


The employer will only be required to cover the employer National Insurance and employer pension contributions for the hours the employee does not work.


The government has said there will, however, be a short period where they need to change the legal terms of the scheme and update the system. During this period, the employee will need to be paid in arrears.

Who is eligible to claim under the extended Furlough scheme?


To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means that a Real Time Information (RTI) submission to HMRC notifying payment for that employee must have been made on or before 30th October 2020.

  • All employers with a UK bank account and UK PAYE schemes can claim the grant.

  • The employee does not need to have been furloughed previously.

  • The employer does not need to have used the furlough scheme previously.

  • Employees can be on any type of employment or worker contract.

  • A claim period of a minimum of 7 consecutive calendar days is required.


The government expects that publicly funded organisations will not use the scheme, as per the terms of the earlier CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted.


Can employees be brought back on to furlough who have just been made redundant?


Where an employee has been made redundant or stopped working for their employer, providing they were on the employer’s PAYE payroll by 23:59 30th October 2020 they will qualify for this extended furlough scheme. A Real Time Information (RTI) submission to HMRC notifying payment for that employee must have been made on or before 30th October 2020.


Where someone has been made redundant and then rehired within 4 consecutive weeks, the employee will keep their statutory redundancy pay under section 214 of the Employment Rights Act 1996.


Having received their redundancy payment will break the employee's continuous service, so if the employee is brought back to work, and furloughed, their continuous service starts from zero again.


Where the employee is made redundant again in the future, the employee would not be entitled to a second statutory redundancy payment until they had accrued another two years' continuous service from the date they had been brought back to work.


If an employee is brought back to work just to be furloughed, will they be entitled to any notice pay at the end of the furlough period?


It is important to note what is in the contract of employment, as the contract may state a higher notice period entitlement than the statutory notice, which is

  • Less than 1 month’s service - not entitled to any statutory notice pay upon dismissal.

  • More than 1 months’ service and less than 2 years - entitled to 1 week’s statutory notice pay.

Employees will also accrue annual leave from day 1 of employment, payable at the point of termination unless they have taken their annual leave whilst furloughed.


Do employees need to consent to be furloughed?


As per the previous scheme, employees will need to consent in writing to be placed on furlough at 80% of their usual pay. It is important to note, however, that all other contractual T&Cs and employment statutory rights remain intact and unaffected by the furlough agreement.


Is flexible furloughing permitted?


Flexible furloughing will be allowed in addition to full-time furloughing.


Can employers top up the furlough pay?


Yes. Furlough pay can be topped up by the employer, at their discretion


Can employees use annual leave whilst on furlough?


At present, the government guidelines do not expressly confirm an answer to this question. However, the previous scheme did permit employees to use annual leave whilst on furlough. If this is permitted again, we would expect the same rules to apply; however, we await further guidance on this from the Government.


Under the last furlough scheme, where annual leave was taken whilst on furlough, the employee needed to be paid at 100% of their normal salary. This could be made up of furlough pay plus an employer’s 20% top up payment.


Can employees be made redundant whilst on furlough?


At present, the government guidelines do not expressly confirm an answer to this question. However, the previous scheme did permit employees to be placed on notice of redundancy whilst on furlough. Therefore, it does stand to reason this may be permitted.


If this is permitted again, we would expect the same rules to apply; however, we await further guidance on this from the Government.


Under the last furlough scheme, where notice of redundancy was issued whilst an employee was on furlough, the employee needed to be paid at 100% of their normal salary for their whole notice period. This could be made up of furlough pay plus the employer’s 20% top up.

It is expected that furlough cannot be used where the employee is being paid payment in lieu of notice (PILON) and cannot be used towards statutory redundancy payments.


It is also expected standard employment law will apply in respect of rehiring someone following a redundancy, which is governed by section 214 of the Employment Rights Act 1996. For more information on this area and a more detailed discussion around the potential implications of rehiring someone after making them redundant, please contact the rradarstation team of advisors on 0800 955 6111.

Job Retention Bonus


The Job Retention Bonus will no longer be paid in February, as the Coronavirus Job Retention Scheme has been extended until the end of March 2021. Further details about the extension are available.

Self-employed Support grant extension


The extension will last for 6 months, from November 2020 to April 2021. Grants will be paid in 2 lump sum instalments each covering a 3-month period.


The third grant will cover a 3-month period from 1st November 2020 until 31st January 2021. The Government will provide a taxable grant calculated at 80% of 3 months' average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This is an increase from the previously announced amount of 55%.


The Government is providing the same level of support for the self-employed as for employees through the Coronavirus Job Retention Scheme.


The Government has already announced that there will be a fourth grant covering February 2021 to April 2021. The Government will set out further details, including the level, of the fourth grant in due course. The grants are taxable income and also subject to National Insurance contributions.

HMRC will publish details of employers who make claims under the extended CJRS scheme, starting from December. Full details will be included in full guidance which will be published on 10th November 2020.



Written by

Kiri Thompson, HR Advisor at rradar


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