On the 5th of November, the Chancellor of the Exchequer announced that the Job Retention Scheme would extend until March 2021.
For many employers, the extra funding will come as a big relief. But with the rules on furlough changing rapidly, you may need more information on how the extension affects your business.
Here’s an overview of how the furlough extension will work and what you need to do to unlock your government grants.
How long will the Job Retention Scheme run for?
The extended Job Retention Scheme is set to run from the 1st of November 2020 until the 31st of March 2021.
During this time, employees on furlough will receive at least 80% of their wages, up to a cap of £2500 per month.
Which organisations can access the scheme?
The Job Retention Scheme is open to all UK businesses, whether they are in a lockdown or not.
However, the government does not expect publicly funded organisations to use the scheme.
How much can I claim for furloughed staff?
Between November 2020 and January 2021, you can claim up to 80% of furloughed staff’s wages up to £2500 per month. However, you’ll still need to pay National Insurance and employer pension contributions.
In January 2021, the government will review how much it contributes to staff wages. This means you may need to pay out more for staff on furlough.
Who can I put on furlough?
To be eligible for the Job Retention Scheme extension, employees must have been on your PAYE payroll by 23:59 on the 30th of October 2020.
This means you must have made a Real Time Information (RTI) submission notifying payment for that employee to the HMRC between the 20th of March 2020 and the 30th of October 2020.
Employees on any type of contract can go on furlough. This includes workers, agency workers, office holders and salaried members of Limited Liability Partnerships (LLPs).
Can I bring people back from redundancy and furlough them?
You may bring employees previously made redundant back to work as long as they were employed by you and on your payroll on the 23rd of September 2020.
That means HMRC must have been notified of payment to the employee via an RTI submission between the 20th of March 2020 and 23rd of September 2020.
How do I put staff on furlough?
You’ll need to seek your staff’s agreement to go on furlough and send them a letter confirming this agreement.
You can backdate furlough agreements until the 1st of November as long as the employee was genuinely on furlough since then. To do this, you must put the backdated agreement in place with your staff by the 13th of November.
Employers should refresh an employee’s existing pre-November furlough agreement to ensure continued periods are covered by a valid agreement.
Remember to keep a record of your furlough agreements for five years to meet government guidelines.
If HMRC were to audit your business, you would need to provide evidence of this agreement and an accurate record of the hours and dates that your staff were on furlough.
Can I put staff on flexible furlough?
Yes, you can still ask employees to work part of their hours and claim 80% of their wages for the hours not worked. The maximum you can claim will be proportionate to the number of hours not worked.
For example, you can claim 80% of wages for people on full-time furlough up to a cap of £2500 per month. For an employee who is on furlough for half of their normal hours, you can claim 80% of their wages for the hours not worked up to a cap of £1250 per month.
Can I still claim my Job Retention Bonus?
No, you can no longer claim the Job Retention Bonus for bringing staff back from furlough. However, the Chancellor may announce ‘further incentives’ at a future date.
How does this impact the Job Support Scheme?
The Job Support Scheme, which was meant to replace the furlough scheme, is on hold indefinitely.
If you had already agreed to put staff on the Job Support Scheme, you can move them onto furlough. Again, you will need your employees’ agreement to put them on furlough, which is a further change to their terms & conditions.
Do staff still accrue holiday leave on furlough?
Yes, your employees continue to accrue annual leave while they’re on furlough. They can take holiday too, although the same rules on accepting or refusing holiday requests apply.
Need more advice on the Job Retention Scheme?
Peninsula clients enjoy access to 24/7 HR support to help them follow the correct furlough process and apply for government grants.
Find out how we support you to get the best for your business, please call us on 0800 028 2420