The Government’s u-turn in respect of a national lockdown may have come as unwelcome news but for some it has come with the welcome side effect that the Government’s Coronavirus Job Retention Scheme (aka the Furlough scheme) has been extended until December.
The Government’s Furlough scheme was due to end on 31 October 2020 and to be replaced with the new (less generous) Job Support Scheme.
However, the Furlough scheme has now been extended until December 2020, to mirror the fact that we are now due to be in a national lockdown until at least 2 December 2020.
The Job Support Scheme, which was scheduled to come in to force on Sunday 1st November, has been postponed until the Furlough scheme ends.
What does this mean in practice?
The Furlough scheme has slowly become less generous for employers since it was first introduced in March 2020, with companies having to contribute 10% towards employee wages in September and 20% in October, however the Government has confirmed that the extension of the Furlough scheme, will revert back to the levels of contribution as they stood in August 2020.
This means that the Government will pay 80% of employees’ wages for hours not worked, up to a maximum of £2,500 per month and employers will only have to contribute pension and National Insurance.
This means that the extended Furlough scheme is more generous for employers than it was in October. Businesses will also still have the flexibility to bring furloughed employees back to work on a part-time basis or Furlough them full-time.
The Job Support Scheme, which was due to replace Furlough, has been postponed until the extended Furlough scheme ends.
- For hours not worked by the employee, the Government will pay 80% of wages up to a cap of £2,500 per month.
- The grant must be paid to the employee in full.
- Employers will pay employer NICs and pension contributions and should continue to pay the employee for hours worked in the normal way.
- As with the current Furlough scheme, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
We understand that further details, including how to claim this extended support through an updated claims service, will be provided by the Government shortly.