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Furlough extension: what does the new guidance say?

Extended Furlough

The government has now published further guidance on the extension of the furlough scheme from 1st November 2020. Broadly, the scheme will continue to operate in the same way, but the government contribution will revert to 80% of wages (up to a maximum of £2,500 per month). Employers will require to pay pension contributions and employer NICs for furloughed employees and cannot claim these payments back as part of the scheme.

There are a few points of note in the guidance about how the extended scheme will operate and some indicated changes, which we look at below.


Up to 31st October 2020, employers could only furlough employees they had previously furloughed between 1 March and 30 June 2020 for at least 3 consecutive weeks.

For claims after 1st November 2020, employers can furlough employees who have not previously been furloughed and there is no maximum number of employees you can claim for. Due to the extension of the scheme being announced at short notice, furlough agreements can be made retrospectively to have effect from 1 November 2020 but they must meet the conditions required (i.e. being in writing and in accordance with employment law) and must be in place by or on the 13 November 2020.

Claims can be made for employees who were employed on 30 October 2020, as long as a PAYE submission has been made to HMRC notifying a payment for that employee between the 20 March 2020 and 30 October 2020. If employees have been made redundant or stopped working on or after the 23rd September 2020, they can be re-employed and placed on furlough as long as a PAYE submission was made for them between 20th March and 23rd September 2020. This does not apply if they are working for another employer who is placing them on furlough.  

Claims can also be made by new employers for employees who have transferred to them as a result of a TUPE transfer or a change in ownership to which PAYE business succession rules apply, as long as the employees were employed by their prior employer on or before the 30th October 2020.

The guidance also confirms that employees who are unable to work as a result of shielding, being at high risk of severe illness for Covid-19 or due to caring responsibilities resulting from Covid-19 can be furloughed.

Furloughed employees who become ill must be paid at least Statutory Sick Pay as they retain this statutory right. It is up to employers to decide whether to move the employee on to SSP or to keep them on furlough. In practice, it will likely to be preferable to keep employees on furlough as the furlough grant cannot be claimed for periods of sickness and employers are required to SSP themselves (although may qualify for a rebate of up to two weeks of SSP if the sickness is coronavirus related).

Rules for furloughed employees

The scheme will broadly operate as previously. Flexible furlough continues to apply and employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked, although the claim period must cover a minimum of 7 days.

A furloughed employee can take part in volunteer work during hours for which they are furloughed, as long as it is for another employer or organisation, and can also undertake training. Employees carrying out training must be paid at least the national minimum wage for any time spent training.

Furloughed employees continue to accrue holidays, and can take periods of holiday while on furlough, but must receive 100% of their pay for any days taken as annual leave.

If a furloughed employee is made redundant, this must be in accordance with the usual rules, including carrying out consultation (including collective consultation if applicable) and giving notice of termination. Employers can claim for a furloughed employee who is serving a statutory notice period, but cannot claim in respect of redundancy payments. Statutory redundancy and notice payments must be based on the employee’s normal wage – not their reduced wage while on furlough.

When placing an employee on furlough, this must be confirmed to them in writing and a record of this, as well as number of hours worked and number of hours furloughed, must be kept for five years. The employee does not require to provide a written response. Any changes should be made in accordance with employment law and the employee’s contract of employment.

Key changes in guidance

At this stage there are a few points in the guidance which indicate changes to the scheme which will take effect in future.

It has been indicated that the government will review the scheme and the contribution levels may change from January 2021. We may therefore see a further tapering to reduce the level of government contributions as was previously the case for September and October.

A further point of note is that the guidance states that the government is reviewing whether employers will continue to be able to claim payments under the furlough scheme for employees serving their notice period, either contractual or statutory. The approach may therefore change from 1st December 2020, and it is noted that further guidance is to be published in late November. It is therefore possible that from December claims will not cover the notice period of furloughed employees, so this may effect decisions about planned redundancies.

Further, the guidance notes that from December 2020, HMRC will publish employer names for companies and Limited Liability Partnerships (LLPs) who have made claims under the scheme for December 2020 onwards. It does not detail any more than this at this stage, although it seems this measure is likely intended to deter fradulent claims or deter companies from making claims excessively or unnecessarily.

For assistance with furlough or other employment issues, arising from Covid-19 or otherwise, contact our employment team.

Extended Furlough Scheme – More Detail Published
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