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Furlough Scheme Extended until March 2021

Further to our update earlier this week, the Coronavirus Job Retention Scheme (the Furlough Scheme) has now been extended until 31 March 2021.

The Chancellor confirmed this in a statement made to the House of Commons earlier this afternoon. A policy paper has been issued following the announcement and we have summarised the main points of the extended scheme below:

  1. Employees can be furloughed even if they have not been furloughed previously.
  2. Employers can claim for furlough whether their business is open or closed (it is not dependent on there being a lockdown in their area).
  3. The Government will contribute 80% of employees’ usual salary for hours not worked (capped at £2,500 per month). The current guidance does not suggest that employers will have to contribute to this (as was the case in October) but this will be subject to review in January 2021 at which point employers may be asked to contribute.
  4. Reference pay (for calculating 80% of wages) will vary depending on whether an employee has previously used the scheme or not.
  5. The extension applies to both full time and flexible furlough.
  6. Employees made redundant before 23 September 2020 and who were on payroll until that date can be re-employed and placed on furlough.
  7. Employees can be (but do not have to be) furloughed if they are unable to work because they are shielding in line with public health guidance or have caring responsibilities resulting from the coronavirus (including child care).
  8. Further Government guidance will be released next week. 
  9. As before, employers should agree the furlough with employees and put this in writing. Any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a furlough scheme claim as long as it meets certain conditions and is put in place on or before 13 November 2020. 
  10. Annual leave continues to accrue as normal during furlough. You should encourage employees to use up their holidays whilst on furlough, to avoid a build-up later in the year. 80% of normal pay for holidays can be claimed as furlough pay, but you must top this up to 100% of normal pay.

For the avoidance of doubt, the Job Support Scheme and Job Retention Bonus have been put on hold.

Should you have any questions regarding the recent updates to the Furlough Scheme, please do not hesitate to get in touch with the Employment and Holistic HR Team who would be happy to help.


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