Extended furlough scheme - our complete guide to the new rules including important information about redundancies

As expected, the government has now updated its guidance notes on the furlough scheme to reflect changes which came into effect on 1 November. There's 12 separate guidance notes to wade through, although the most significant changes are contained in these documents: 

• Check which employees you can put on furlough
• Check if you can claim for your employees' wages

Not all of the guides are consistent and within hours of the updated guidance being published, HMRC had taken to twitter to clarify some of the ambiguities raised by employment lawyers. 

The updated guides don't add that much to what we know and have already told you about. However, to prevent you having to click back and forth between our recent blogs, we've set out below how the scheme works, what you have to do to claim and issues that you need to be aware of.

Which organisations can claim?

The extended scheme is open to any UK organisation, whether they are currently open or closed due to national or regional lockdown restrictions. The eligibility criteria reflects the previous rules with the important proviso that employers can claim even if they've not done so before.

One other change is that HMRC will publish details of employers who make claims under this scheme, starting from December 2020. The updated guidance still doesn't say whether this is to deter large organisations from claiming if they have deep pockets and are still trading in profit, or to deter employers from claiming it fraudulently.  

If you receive public funding, the government 'expects' you to not use the scheme. If you're partially funded from the public purse, you may be able to if your 'private revenues' have been disrupted. We explained how this worked under the previous scheme here.

Which employees can be furloughed?

The rules are different from the original and flexible furlough schemes in that you can claim for any employee who is on your PAYE payroll by 23.59 on Friday 30 October 2020 provided you have submitted Real Time Information about them to HMRC by that date. This means that new starters or people who have not previously been furloughed will qualify and there aren't any limits on the total number of people you can furlough this time.

Also, as previously you can furlough;

• Apprentices (they can continue to train while on furlough)
• Foreign nationals and employees on all categories of visa
• Supply teachers
• Company directors
• Contractors in the scope of IR35 rules
• Salaried members of an LLP
• Office holders

You also have flexibility to furlough staff for all or some of their hours and to change this by agreement. 

More information about who can be furloughed is set out in government guidance available here.

What about staff we've inherited following a TUPE transfer?

You can claim for staff that have transferred to you following a TUPE transfer provided the transfer took place on or after 1 September 2020 and they were employed either by you or their previous employer on 30 October 2020. HMRC must also have received PAYE Real Time Information for each employee furloughed between 20 March and 30 October.

Can we furlough staff returning from maternity or other forms of statutory leave? 

If an employee returns from maternity, shared parental, adoption, paternity or parental bereavement leave and are claiming for a period that starts on or after 1 November, the normal scheme rules apply.

If an employee decides to end their maternity leave early to enable them to be furloughed (with the employer's agreement), they will need you at least eight weeks' notice of their return to work (unless you agree a shorter period) and you can't furlough them until that notice period ends. 

Can we furlough staff who are unable to work due to ill health or because they are caring for others?

Employees can be furloughed if they are unable to work because they: 

• are shielding in line with public health guidance (or need to stay at home with someone who is shielding)
• have caring responsibilities resulting from coronavirus, including employees that need to look after children

However, the government has said that the scheme should not to be used for those people who are ill for a short period: 'short term illness/self-isolation should not be a consideration in deciding whether to furlough an employee. If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees. In these cases, the employee should no longer receive sick pay and would be classified as a furloughed employee'.

The reference to business purposes means that you can furlough staff (even if they are only ill for a few days) if you are furloughing your entire workforce, or the part of it they work in. 

Employees who become ill must be paid at least Statutory Sick Pay (SSP) unless they are already furloughed. The guidance makes it clear that you can claim back from both the Coronavirus Job Retention Scheme and the SSP rebate scheme for the same employee but not for the same period of time. 

Can we use the furlough scheme to help pay staff wages when we shut down over Christmas?

No. Government guidance makes it clear that employees should not be placed on furlough simply because they are on holiday.

What's the position if we've already made people redundant or are going through a redundancy process?

You can, if you wish to, re-employ anyone you've made redundant and furlough them provided they were still employed by you on 23 September 2020 and you've made a PAYE RTI submission to HMRC between 20 March and 30 October 2020. This also applies to anyone you engaged on a fixed term contract on that date which expired afterwards (provided that the other eligibility criteria are met).

However, as we explained here, the original guidance (which was only issued on 10 November) said that the government was reviewing whether employers could claim for staff serving contractual or statutory notice periods on or after 1 December. That 'review' was undertaken at breakneck speed and, during the afternoon of Friday 13 November, the government changed its guidance to provide that 'for claim periods starting on or after 1 December 2020, your employer cannot claim for any days on or after 1 December 2020 during which you were serving a contractual or statutory notice period for your employer (this includes people serving notice of retirement or resignation)'. This means that even if you served notice before 1 December, any employees still serving notice will have to be taken off furlough at the end of this month.  

Do staff have to be furloughed for a minimum period?

No, but the minimum claim period will remain seven consecutive calendar days. 

Are there still restrictions about what employees can do if they're furloughed?

Yes, these mirror the previous rules. Therefore, for anytime when an employee is on furlough (whether full time or flexibly) they can't work for you or for any organisation linked or associated with you. They can, however take part in training, volunteer for another employer or organisation or work for someone else (subject to obtaining your agreement if necessary).

Do employees have to agree to be furloughed?

Yes. To qualify for the grant, you must have a written agreement in place between you and each member of staff you are furloughing (unless you've agreed this collectively with a trade union). The agreement should set out the hours the employee has agreed to work or not work and ideally, explain how much the employee will receive by way of furlough pay. 

If you intend to claim from 1 November, you must have had an agreement in place by Friday 13 November. If you've missed that deadline, the government has said that you'll only be able to claim from the date you actually reached agreement with your staff. 

How much do you have to contribute?

The government has effectively turned back the clock to August. It will pay 80% of the employee's furloughed wage (subject to the cap of £2,500 per month for anyone who is fully furloughed). For anyone whose hours have been reduced (flexible furlough) the £2,500 cap is reduced proportionately to the number of unworked hours. Employers just have to pay NI and pension contributions on the full amount paid to the employee (including the furlough pay).

However, the government has said that it may start to ask employers to contribute after January 2021 and will review the position nearer the time. It's therefore possible, that employers will be asked to start paying a percentage of the furloughed wage in February and March. 

How much can you claim?

If you've previously furloughed a member of staff on fixed pay, use the CJRS calculations that applied in August 2020 to work out reference pay and usual hours. You also use these calculations for any member of staff you didn't furlough who was previously eligible under the original scheme.

For variable hours workers, follow the usual rules. 

However, if you've not used the scheme before, or are claiming for new staff employed after 20 March 2020, the following rules apply:

• For employees on fixed pay, use the last pay period prior to 30 October 2020
• For employees whose pay varies work out 80% of their average pay calculated from the start of their employment, or 6 April 2020 if that's later, and the day before they start furlough

You must report and claim for a minimum period of seven consecutive calendar days. You must set out the actual hours worked and the usual hours an employee would be expected to work in a claim period and the claim period must start and end within the same calendar month. If the pay period includes days in more than one month, you need to calculate each of those claims separately. Claim periods can't overlap, and employees claimed for will need to be included in each separate claim made.

If your putting 100 or more employees on furlough, you can download a template and upload this when you claim. 

You must pay the full amount you are claiming for your employee’s wages to your employee. You can't enter into any agreement with your staff which reduces their wages below the amount you have claimed. However, if an employee has authorised you to make deductions from their pay, your can continue to deduct these from their furlough pay provided they aren't administration charges, fees or other costs in connection with their employment.

When can you start to submit claims?

The portal is now open for claims under the extended scheme. You don't have to wait until the end date of the claim period for a previous claim before making your next claim and can make your claim more than 14 days in advance of the pay date (for example, if you pay your employee in arrears).

Claims relating to November 2020 must be made on or before 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month as follows: 

The closing date for claims up to and including 31 October remains 30 November 2020.

Agents who are authorised to do PAYE online for employers will be able to claim on their behalf.

What records do you have to keep?

Once you’ve claimed, you’ll get a claim reference number. HMRC will then check that your claim is correct and pay the claim amount by BACs into your bank account within six working days.

You must keep a copy of all records for six years, including:     

• the amount claimed and claim period for each employee
• the claim reference number for your records
• your calculations in case HMRC need more information about your claim
• for employees you flexibly furloughed, usual hours worked including any calculations that were required
• for employees you flexibly furloughed, actual hours worked

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