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New Covid lockdown sees furlough scheme extended

31st October 2020


A policy paper on the extension has been published, with more details to come.

With just hours to go before the start of the Job Support Scheme (JSS) on 1 November, the Prime Minister announced a one-month extension to the Coronavirus Job Retention Scheme (CJRS) - the furlough scheme - to ensure furloughed employees continue to receive 80% of their wages for hours not worked, and businesses only have to pay the National Insurance and employer pension contributions.

Just a few days later, the Chancellor has extended the scheme to 31 March 2021, and in the process scrapping the previously announced Job Retention Bonus

This means the extended furlough scheme is more generous for employers than it was in October. And an employer can re-employ an employee if they were made redundant or stopped working. 

With the Covid infection numbers rising, a decision was made to put England into another lockdown from Thursday 5 November until the end of Wednesday 2 December, although if the Covid R rate has not fallen below one then the lockdown may continue in some form.

Under new restrictions from 5 November, everyone must stay at home, and may leave only for a limited set of reasons. These include:

  • For education;
  • For work, if you cannot work from home;
  • For exercise and recreation outdoors, with your household, support bubble or on your own with one person from another household;
  • For all medical reasons, appointments and to escape injury or harm;
  • To shop for food and essentials;
  • And to provide care for vulnerable people, or as a volunteer.

A full set of exemptions have been set out in law.

The rules for the new JSS were only published just after 7pm on Friday 30 October, just a day before it was due to start, and its future could now be in doubt if England remains in lockdown for longer than envisaged.

An alternative to extending furlough could have been to increase the percentage of government contribution under JSS.

By the end of October, the percentage of government contribution to wages under the furlough scheme had fallen to 60%, with employers making up the 20% balance to give employees 80% of their pay.

Up to August, the government was contributing to 80% of wages, and now we are back to that level of contribution for this extension.

The government contribution under JSS was planned to be 61.67% under JSS Open and 66.67% under JSS Closed.

Details of the extended furlough scheme

Job Retention Scheme

NOTE: Employers concerned about how to implement changes to working agreements retrospectively can be reassured that as long as they are consistent with employment law, furlough agreements made retrospectively that have effect from 1 November 2020 can support a furlough grant claim. However, these retrospective agreements must be in place on or before 13 November 2020 to be relied on for this purpose.

  • This extended CJRS will operate as the previous Scheme did, with businesses being paid upfront to cover wages costs. There will be a short period when the government will need to change the legal terms of the scheme and update the system, and businesses will be paid in arrears for that period.
  • The CJRS is being extended until December. The level of the grant will mirror levels available under the CJRS in August 2020, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer NICs and pension contributions only for the hours the employee does not work.
  • As under the current CJRS, flexible furloughing will be allowed in addition to full-time furloughing.
  • Further details, including how to claim this extended support through an updated claims service, will be provided shortly.
  • JSS will be introduced following the end of the CJRS.

Who is eligible?


  • All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.
  • The government expects that publicly funded organisations will not use the scheme, as has already been the case for CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.


  • To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th 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.
  • (So directors of their own companies could use the scheme for November if they have had earnings before 30 October).
  • Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.
  • Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.
  • When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
  • Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
  • For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

What support is being provided and employer costs:

  • For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.
  • Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way.
  • As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
  • The Government 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.

[Gary Mackley-Smith]

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