Furlough scheme extension: The details mobility retailers and suppliers need to know
The government has confirmed that the Coronavirus Job Retention Scheme – better known as the furlough scheme – will remain available for an additional month as England goes back into lockdown.
Set to end on 31 October, the furlough scheme will now remain open until December, with employees receiving 80 per cent of their current salary for hours not worked, up to a maximum of £2,500.
According to the government, this extended Job Retention Scheme will operate as the previous scheme did, with businesses being paid upfront to cover wages costs.
The extension means the replacement Job Support Scheme will not come into place until after the extended Coronavirus Job Retention Scheme has finished.
Chancellor Rishi Sunak said: “Over the past eight months of this crisis we have helped millions of people to continue to provide for their families. But now – along with many other countries around the world – we face a tough winter ahead.
“I have always said that we will do whatever it takes as the situation evolves. Now, as restrictions get tougher, we are taking steps to provide further financial support to protect jobs and businesses. These changes will provide a vital safety net for people across the UK.”
Lower costs for mobility and access companies
Under the new extended scheme, the cost for employers in the sector to retain workers will reduce to the level of contributions required in August. Companies will be required to cover National Insurance and employer pension contributions.
The Treasury states the average claim for these accounts for just 5 per cent of total employment costs.
The government will continue to pay 80 per cent of the furloughed employees’ salary (subject to the £2,500 cap).
As with the current furlough scheme, employers will still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
Unlike the first lockdown, companies will also have the flexibility to bring furloughed employees back to work on a part-time basis or furlough them full-time.
The extended scheme will be available for all employers, small or large, charitable or non-profit, with a UK bank account and UK PAYE schemes.
Importantly, neither the employer nor the employee needs to have previously used the furlough scheme to be eligible to claim for the grant during the extended period.
To be eligible to be claimed under the extension, the employee must be on an employer’s PAYE payroll by 23:59 on 30 October 2020. This means a Real-Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
The scheme is open to employees on any type of contract and the government highlights that employers and employees can agree on any working arrangements.
To claim for a Coronavirus Job Retention Support Grant for furloughed hours, however, employers will need to report and claim for a minimum period of seven consecutive calendar days. Employers will also need to report hours worked and the usual hours an employee would be expected to work in a claim period.
For hours worked hours, employees will be paid by their employers, who will be responsible for paying the tax and NICs due on those amounts.
How to claim
Most importantly for mobility companies facing another difficult lockdown will be how to claim for the extended furlough scheme.
Currently, the government has only released the following statement: “Further details, including how to claim this extended support through an updated claims service, will be provided shortly.”
The Treasury has also confirmed that additional guidance will be set out shortly.
Notably, the government has stated that it “will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.”
The origins of the Coronavirus Job Retention Scheme
Initially announced by Chancellor Rishi Sunak on 20 March and going live on 20 April, the Coronavirus Job Retention Scheme enabled employers keep staff employed while not working, with 80 per cent of their wages covered by the government.
The scheme was originally intended to run until the end of June 2020 as a means of preventing mass unemployment during the first lockdown as the economy ground to almost a standstill.
In July 2020, a new degree of flexibility and higher employer contributions were added to the furlough scheme, allowing employers to bring workers back part-time but also having to pay more for their unworked hours.
Rishi Sunak said the extended furlough scheme would begin on 1 July and run until the end of October, replacing the initial June end date.
Under this flexible scheme, employers could agree on any working arrangements with previously furloughed employees to work any amount of time and any shift pattern while still claiming the furlough scheme grant for their normal hours not worked.
The furlough scheme was set to be replaced by the Job Support Scheme, which was scheduled to come in on Sunday 1 November. This has now been postponed until the furlough scheme ends in December.https://thiis.co.uk/furlough-scheme-extension-the-details-mobility-retailers-and-suppliers-need-to-know/https://i1.wp.com/thiis.co.uk/wp-content/uploads/2020/11/Coronavirus-Job-Retention-Scheme-extend-Nov.jpg?fit=900%2C600&ssl=1https://i1.wp.com/thiis.co.uk/wp-content/uploads/2020/11/Coronavirus-Job-Retention-Scheme-extend-Nov.jpg?resize=150%2C150&ssl=1Business SupportCoronavirus NewsCOVID-19 Sector NewsCOVID-19 Trade NewsGovernment & Local AuthoritiesNewsroomRetailer NewsSector NewsSupplier NewsTrade Newscoronavirus,Coronavirus Job Retention Scheme,COVID-19,extension,furlough scheme,job support scheme,National Insurance,pension,Rishi Sunak,treasuryThe government has confirmed that the Coronavirus Job Retention Scheme – better known as the furlough scheme – will remain available for an additional month as England goes back into lockdown.Set to end on 31 October, the furlough scheme will now remain open until December, with employees receiving 80...Calvin BarnettCalvin Barnettcalvin@thiis.co.ukAdministratorTHIIS Magazine