Government extends furlough scheme to March 2021

Employers to receive £1,000 for every furloughed employee brought back to work

The government has extended the Coronavirus Job Retention Scheme (CJRS) to March 2021, following the introduction of national lockdown restrictions across England on 5 November 2020.

Under the terms of the extension, the government will continue to pay up to 80% of a person’s wage capped at a maximum of £2,500 a month. The scheme, which had previously been extended to December 2020, will now be reviewed in January 2021.

The extension of the furlough scheme will now replace the Job Retention Bonus, which was due to come into effect from October 2020 and required employers to keep employees returning from furlough on the payroll until January 2021 in order to claim a payment of £1,000 per employee.

Speaking to the House of Commons on 5 November, Rishi Sunak (pictured), Chancellor of the Exchequer, said: “The government’s intention is for the new health restrictions to remain only until the start of December, but, as we saw from the first lockdown, the economic effects are much longer lasting for businesses and areas than the duration of any restrictions. As the Bank of England has said this morning, the economic recovery has slowed and the economic risks are ‘skewed to the downside’.

“Given this significant uncertainty, a worsening economic backdrop and the need to give people and businesses security through the winter, I believe it is right to go further, so we can announce today that the furlough scheme will not be extended for one month; it will be extended until the end of March.

“Of course, as the furlough itself is now being extended to the end of March, the original purpose of the Job Retention Bonus to incentivise employers to keep people in work until the end of January obviously falls away. Instead, we will redeploy a retention incentive at the appropriate time.”

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Joanne Frew, head of employment practice at law firm DWF, added: “The extension of the CJRS will provide employers with much needed support and a degree of certainty over the winter months for employers and employees.  The ever-changing government support has once again been updated to continue to try, and protect jobs and livelihoods across the UK.

“Now is the time for crucial business planning, including auditing the workforce to determine who needs to be furloughed. Employers will need to ensure the correct records and furlough agreements are in place, providing vital evidence to HM Revenue and Customs of the genuine nature of claims made and providing maximum flexibility with regard to the furlough arrangement to ensure the employer can focus on business continuity. Employers also need to revisit finances to ensure any expectation of the job retention bonus is removed, as that will no longer apply.”