Extension to Furlough: What Employers Need to Know

Last updated: 16 March 2021

Estimated reading time: 10 minutes

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Extension to Furlough: What Employers Need to Know

On 3 March 2021 the Chancellor, Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) will be extended until 30 September 2021. So, what do employer’s need to know now? And how can you go about quickly making a successful claim under the extended furlough scheme? We outline what you need to know about the extended furlough scheme below and get insight from employment solicitor, Ella Bond.

Jump to:

  1. What does the extended Coronavirus Job Retention Scheme offer?
  2. Which employees will qualify under the extended CJRS?
    1. CJRS claims for employees who have been made redundant
    2. CJRS claims for employees returning after parental leave
    3. CJRS claims and TUPE
    4. CJRS claims and fixed term contracts
  3. What will employers need to contribute to employee pay under the extended CJRS?
  4. What do employers have to do to furlough employees under the extended CJRS?
  5. What about the Job Support Scheme (JSS) and Job Retention Bonus (JRB)?

What does the extended Coronavirus Job Retention Scheme offer?

From 1 November 2020, an employer can make a claim under the extended CJRS for eligible employees.

From 1 November 2020 an employer can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.

The extended scheme will be flexible and so employers can furlough employees for any amount of time and any work pattern, claiming for the hours not worked by employees.

Which employees will qualify under the extended CJRS?

If you are eligible as an employer to make a claim under the CJRS, in addition to those employees you were able to furlough under the original scheme, you will also be able to furlough employees that have not previously been furloughed. This applies to the periods running from 1 November 2020 under the extended CJRS. There is no cap on the number of employees that you can make a claim for from 1 November 2020.

Here are the time periods and employment dates for claim under the extended furlough scheme:

Time period claimed forEmployee employed byPAYE RTI submission must be made
ending on or before 30 April 202130 October 2020between the 20 March 2020 and 30 October 2020
on or after 1 May 20212 March 2021between 20 March 2020 and 2 March 2021

The dates for PAYE RTI submissions may differ if you made employees redundant, or they stopped working for you on or after 23 September 2020 and you have re-employed them.

For periods ending on or before 30 June you can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. From 1 July 2021, the percentage of grant will be reduced each month and you will be required to contribute towards the cost of your furloughed employees’ wages. You will need to pay for employer National Insurance contributions and pension costs.

You do not need to have previously claimed for an employee before under another payment period, to make a claim.

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.

You can claim for employees on any type of employment contract, whether they work for you full-time, part-time, through an agency, flexibly or under zero-hour contracts.

Grants under the CJRS are not counted as ‘access to public funds’, and your business can furlough foreign nationals and employees on all categories of visa.

Since 1 December 2020 employers cannot make claims under the CJRS for those employees who are serving contractual or statutory notice, for whatever reason. It’s also worth noting that from December 2020, HMRC will publish the names of employers claiming under the CJRS from December onwards.

Ensuring you are aware of the scheme rules and adopt the right procedures and have the correct documentation in place when seeking to place an employee on furlough is vitally important. If employees turn out not to be eligible, or companies fail to comply with the rules of the scheme in any other way, then the grant may be revoked or refused. And given it is paid retrospectively this could leave companies in real financial hardship in what is already likely to be a difficult economic time for them. 

Ella Bond, Employment Solicitor

CJRS claims for employees who have been made redundant

You can also make a claim for employees made redundant, or who otherwise stopped working for you on or after 23 September 2020 if you choose to re-employ and furlough them. For this to apply the employee should be employed and on your business’ PAYE payroll on or before 23 September 2020. Again, this means a PAYE RTI submission notifying a payment in respect of that employee must have been made to HMRC between 20 March and 30 October 2020.

As stated above, furlough pay cannot be claimed for any day an employee is serving contractual or statutory notice, including for redundancy and redundancy pay, holiday and notice pay on redundancy must be made at the employee’s full wage and not their furloughed wage.

CJRS claims for employees returning after parental leave

Since 1 November 2020 you have been able to claim under the extended CJRS for an employee returning from maternity, shared parental, adoption, paternity, or parental bereavement leave and the normal scheme rules apply to this.

If your employee requests to end their maternity leave early so that, with your agreement, they can be furloughed, this is also allowed. But the employee will be required to give you at least 8 weeks’ notice of their return to work and you can only furlough them after the 8-week notice period expires.

If your employee is receiving Maternity Allowance while they’re on maternity leave, you should make clear to them that they should not receive furlough pay for the same period.

CJRS claims and TUPE

To claim for a period between 1 November 2020 and 30 April 2021 for an employee who was transferred from another business, the employee will need to be included on a PAYE Real Time Information (RTI) submission to HMRC on or before 30 October 2020 or you may qualify if the TUPE or PAYE business succession rules apply to the change in ownership.

If you are the new employer, you can claim for employees transferred between 1 September 2020 and 30 April 2021 if the transferred employee:

  • Were employed by the old employer on or before the 30 October 2020
  • transferred from their old employer to their new employer on or after 1 September 2020
  • included on a PAYE Real Time Information (RTI) submission to HMRC, by their old employer, between 20 March 2020 and 30 October 2020

For a claim during the period beginning on or after 1 May 2021 for an employee who was transferred from another business, you can claim under the normal rules if they were included on a PAYE Real Time Information (RTI) submission to HMRC on or before 2 March 2021 or you may qualify if the TUPE or PAYE business succession rules apply to the change in ownership.

The new employer can claim for employees transferred on or after 1 January 2021 if the transferred employees:

  • were employed by the old employer on or before 2 March 2021
  • transferred from their old employer to their new employer on or after 1 January 2021
  • included on a PAYE Real Time Information (RTI) submission to HMRC, by their old employer, between 20 March 2020 and 2 March 2021.

CJRS claims and fixed term contracts

If one of your employees has a fixed term contract which has not expired, you could choose to extend or renew the contract, furlough the employee and make a claim under the CJRS. To make a claim for periods ending on or before 30 April 2021, you can put the employee on furlough as long as they were employed by you on or before 30 October 2020 with a PAYE Real Time Information (RTI) submission made to HMRC between 20 March 2020 and 30 October 2020.

If your employee’s fixed term contract expired on or after 23 September 2020, they can be re-employed and claimed for in the same way as if they had been made redundant. This applies as long as your employee was employed by you on 23 September 2020 and you made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020. If you wish to make a claim for an employee on a fixed term contracts for periods starting on or after 1 May 2021, the employee would need to have been employed by you on 2 March 2021, and a PAYE Real Time Information (RTI) submission made to HMRC between 20 March 2020 and 2 March 2021.

What will employers need to contribute to employee pay under the extended CJRS?

It is important that you look at the rules for the specific time period your business is claiming for under the CJRS. You will need to make payments for employee pensions and National Insurance Contributions, the CJRS will not cover these payments. For periods ending on or before 30 June you can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. From 1 July 2021, the grant will be reduced each month and you will need to contribute towards your furloughed employees’ wages.

Employers are allowed, but do not have to, contribute or top-up for hours employees have not worked. Even if a top-up wage is provided, employees must not work during hours being claimed as furloughed under the CJRS.  

What do employers have to do to furlough employees under the extended CJRS?

If you are looking to furlough an employee for the first time, you should discuss this with the relevant employees and make any changes to the employment contract by agreement. 

You must confirm in writing to the employee that is to be furloughed before making a claim, and your business must keep a record of this agreement for five years. No response is required from the employee. Any flexible furlough or furlough agreement which complies with this and has effect from 1 November 2020 and is made retrospectively, will be valid but must be put in place by the 13 November 2020.

Flexible furlough agreements can last any amount of time, although a claim period is 7 days and so this should be the minimum even if the employee is not working all 7 days. Employees can enter into one flexible furlough agreement, then another on the same or different terms, with the employer’s agreement and to best suit the needs of your business.  Once an agreement has been reached with relevant employees, or trade unions if applicable, employers will then need to calculate how much can be claimed. You can then apply online for furlough payments for the hours that eligible employees are not working for the business when they ordinarily would be

Placing an employee on furlough, technically amounts to a temporary change in their terms and conditions of employment so it important this is handled correctly. Adopting the correct procedures and documentation will help to prevent successful tribunal claims being bought and wider employee relations issues and also ensure the company has future flexibility for the evolving changes in circumstances ahead.

Companies can cover future possible changes to the furlough scheme by ensuring that the documentation pertaining to the furlough expressly states that the arrangement will be kept under regular review and may be amended or ended at any time.

Ella Bond, Employment Solicitor

If you require assistance with this to ensure changes to the contract are precise and fully cover the provisions you and your employee want to agree, or if you would like advice to ensure you are offering furlough equally and in a non-discriminatory way, please contact our specialist employment solicitors.

What about the Job Support Scheme (JSS) and Job Retention Bonus (JRB)?

The launch of the Job Support Scheme has been postponed in favour of continuing with the CJRS at this stage, but may still be introduced in the future.

The Job Retention Bonus (JRB) was not paid in February 2021, as originally planned, as furlough under the CJRS has continued. The JRB was going to be paid to employers to encourage them to keep people in work until the end of January, but as the CJRS is now being extended to 30 September 2021, there is no requirement for the JRB at this point. If you have any specific questions about the changes to the CJRS or any particular situations that your business is facing relating to the CJRS that you would like bespoke advice about, contact our specialist employment lawyers.

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