Government announces extension of furlough scheme

The Government has announced a national lockdown for England from Thursday to be accompanied by an extension of the furlough scheme.

The Coronavirus Job Retention Scheme (CJRS) – also known as the furlough scheme – will be extended and will cover 80% of current salary for hours not worked, up to a maximum of £2,500. The scheme can also be used for supplementing the wages of workers who have to reduce their hours due to lockdown.

Businesses will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs. Employees must be on the Employer’s PAYE payroll at 30th October which means a Real Time Information (RTI) submission must have been made to HMRC for that employee by 30th October.  While the Government updates the claim system, employers will submit wage claims to the Government and be refunded afterwards. Once the system has been updated, Employers will be paid up front to cover staff wage costs. Claims can be for a minimum period of 7 days.

The Job Support Scheme, which was scheduled to come in on Sunday 1st November, has been postponed until the furlough scheme ends.

Mortgage holidays will also be extended. Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six-month holiday and those who have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file. The FCA will announce further information on Monday.

In addition, business premises forced to close in England are to receive grants worth up to £3,000 per month under the Local Restrictions Support Grant. Also, £1.1bn is being given to Local Authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly.

Businesses required to close in England due to local or national restrictions will be eligible for the following:

• For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;
• For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;
• For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.

Kate Palmer, HR Advice and Consultancy Director at Peninsula, said: “The announcement that the furlough scheme will be extended will be welcome news to employers and employees who may have fallen through the gaps presented by the Job Support Scheme which was intended to be in place from 1 November.

“Although the national lockdown in England is slightly less strict than it was back in March, the impact on businesses will be the same as thousands of employers will now need to shut their doors under Government instruction for the second time. Employers should use the remaining days until the lockdown begins to speak to employees about the impact of the lockdown and get agreement to furlough so that redundancies can be avoided, but should be aware that more flexibility has been built in to the rules.

“Employers can use furlough for the first time and can furlough employees who have not been furloughed before provided they began working and had been paid at least once, by 30 October. No employer contribution to wages is needed for unworked hours; grants will be set at 80% of wages to a maximum of £2,500 per person per month which means that wage assistance has increased.

“However, full guidance is yet to be published, so we are still waiting for the full picture. As we have seen several times in recent months, the rules can, and do, change very quickly.”

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