Furlough: What do you need to know about the extended furlough scheme? How does new furlough scheme work?

Time 11 months ago

The furlough scheme was supposed to be replaced by the Job Support Scheme at the beginning of November.

However, that all changed on Saturday (Oct 31) when the prime minister announced that a second national lockdown would start in England on November 5, lasting until December 2.

As part of the new measures, the Job Support Scheme was put on hold and the Coronavirus Job Retention Scheme – to give furlough its proper title – was extended.

But as of November 5 – the first day of England’s month-long lockdown – the furlough scheme has been extended again, this time to the end of March 2021.

It will see employees receive 80 per cent of their salary, up to a maximum of £2,500 per month, taking it back to the original lockdown furlough level.

This means employers will pay less than they did in October, as their contribution had been gradually increasing since the summer.

Employers will, however, have to pay National Insurance and pension contributions for any unworked hours.

Meanwhile, flexible furloughing is continuing as well as full-time furloughing, meaning staff can be asked to work for some of their hours and be furloughed for the rest of them.

Motor trade legal consultancy Lawgistics appeared on Car Dealer Live on November 2 to explain the intricacies.

In the video, which you can watch above, legal adviser Kiril Moskovchuk pointed out that to be eligible for this furlough extension, employees had to have been on the payroll as of 11.59pm on Friday, October 30.

The deadline means employers can’t take staff on over the next few days then put them on furlough.

He said that people should still be able to take holidays while on furlough, though. In fact, it was to be positively encouraged to avoid too much leave being accrued and unused.

Moskovchuk pointed out that this extension was more akin to flexible furlough, with the major difference being that businesses weren’t being required to pay anything other than National Insurance and pension contributions.

He added that people do not have to have been on furlough beforehand to be placed on it this time.

Some viewers wondered about how long people could be furloughed for – could it be for a day, two days or, for example, a three-week chunk, asked Car Dealer founder James Baggott.

‘From what we know, with the policy statement, it says seven consecutive days,’ said Moskovchuk.

‘Whether it will apply to an employer being able to make a claim once every seven days or that the employee will have to be furloughed for seven consecutive days as a minimum, that remains to be seen.’

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In summary, the details of the new furlough scheme are:

  • Workers will receive 80 per cent of their normal salary a month (up to £2,500) funded by the government
  • Employers will be required to pay the NI and pension contributions
  • The flexibility of the current furlough scheme will remain – meaning employers can continue to ask employees to work some of their hours and be furloughed for the rest
  • All employers are eligible. An employee does not need to have been previously furloughed to be eligible
  • An employee must have been on an employer’s PAYE payroll on or before October 30, 2020

Watch the Lawgistics interview in full at the top of this post.

Post originally published on Nov 3. Updated at 13.30 on Nov 5.

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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