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Furlough in 2021: how the furlough scheme has changed

As the new year begins, the subject of furlough is still very much on the lips of employers up and down the country. Following the changes to the rules of the scheme in November 2020, we provide a reminder of the current position below.

Since 1 November 2020, employers have been able to claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. As before, it involves applying for a grant to cover a portion of the employee’s usual monthly wages and they are recorded as being on furlough. Employers are under no obligation to top up to 100% (but may do so if they wish) but will still need to cover the national insurance and pension contributions for employees.

The employer must confirm in writing to an employee that they have been furloughed, and keep a written record for six years. Like ‘flexible furlough’, 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. In flexible arrangements, working hours should be agreed with the employee. When claiming for employees who are flexibly furloughed, employers should not claim until they are sure of the exact number of hours the employee(s) will have worked during the claim period.

In order to claim, the employee must have been employed on 30 October 2020, as long as the employer has made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. The exception to this rule is that if an employer made employees redundant, but they were re-employed and put back on furlough. In this instance, claims can be made for the employee if they were employed and on PAYE payroll on or before 23 September 2020. One of the other key changes is that since 1 December 2020, employers have not been able to claim for employees working a notice period.

Furlough rules are also slightly different for employees returning from particular types of leave. For example, employees returning from maternity leave need to give the statutory eight weeks' notice to end maternity leave early in order to be furloughed (and get furlough pay, typically higher than SMP). 

All employers with a UK bank account and UK PAYE schemes can claim the grant. Employers do not need to have previously claimed for an employee before 30 October 2020 to claim for periods from 1 November 2020. If an employer is claiming for a period that ends on or before 31 October 2020, this falls under the old regime. Here, they can only claim if they have previously furloughed the employee before 1 July 2020 and have submitted a claim for them by 31 July 2020.

Claim periods starting on or after 1 July 2020 must start and end within the same calendar month. All claim periods starting on or after 1 July 2020 must last at least seven days unless the company is claiming for the first few days or the last few days in a month, in which case they must have already claimed for the period ending immediately before it. An employer can only make one claim for any period so they must include all furloughed or flexibly furloughed employees in one claim (even if they are paid at different times). Employers can no longer submit claims for claim periods ending on or before 31 October 2020, and claims for furlough days in December 2020 must be made by 14 January 2021.

In addition to employees, employers will also be able to claim other types of employees - as long as they’re paid via PAYE. These employees include:

  • office holders (including company directors);
  • salaried members of Limited Liability Partnerships (LLPs);
  • agency workers (including those employed by umbrella companies);
  • limb (b) workers;
  • contingent workers in the public sector; and
  • contractors with public sector engagements in scope of IR35 off-payroll working rules (IR35)

One further change is that, from February 2021, HMRC will publish information about employers who claim for periods starting on or after 1 December 2020. The information published will be:

  • the employer’s name;
  • the company number; and
  • an indication of the value of the claim made (within a banded range).

Finally, the ‘Job Retention Bonus’, the £1,000 grant per furloughed employee kept continuously employed, has been deferred. It is not known when, or even if, this will still be available to businesses this year.

Key Takeaways on the Job Retention Scheme

  • Claim 80% of wages of employees for hours not worked, up to £2,500, until 30 April 2021 or earlier if the Government changes the scheme;
  • Employer still must pay NI and pension contributions;
  • Employees must have been in employment on 30 October 2020;
  • Employers must confirm in writing to the employee that they have been furloughed, agreeing hours for flexible furlough, and a written record of the agreement must be kept for five years; and
  • HMRC will publish details about companies utilising the scheme from February 2021.

What should you be doing now?

Follow the above guidance and the latest updates from the Government. If you have any queries, please feel free to call or email our employment team who will be able to advise on the matter.

Recommended Reading

Government guidance for the scheme can be found here.


These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice. 

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