Chancellor announces further extension to furlough scheme

Since the announcement on Saturday (31 October 2020) of the extension of the Coronavirus Job Retention Scheme (furlough scheme) to 2 December 2020, there has been growing pressure on the UK Government to extend the scheme further. This afternoon (5 November), the Chancellor, Rishi Sunak, announced to MPs that the scheme will be extended until the end of March 2021. Details are awaited, but he has stated that the Government will continue to pay 80% of wages, up to the limit of £2,500, for hours not worked. For hours not worked, employers will need to pay pension and national insurance contributions.

Importantly, the job retention bonus (a £1,000 payment to businesses for retaining furloughed staff until the end of January) is being abolished due to the extension of the furlough scheme.

As with the existing furlough scheme, it will be important to ensure that furlough agreements with staff are properly documented. Please contact our Employment team if you require assistance with this.

As has been the way with changes to the furlough scheme, the devil will be in the detail. This detail will be in a new Treasury Direction. We will issue further updates as more information becomes available.

This article was co-written by Nikita Sandhu.

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