HMRC updated ten documents relating to the Furlough Scheme on 10 November 2020, to cover the extension to the Scheme.
In essence:
As might be expected in relation to any new set of rules, there are various areas of concern and uncertainty in relation to the extended Scheme, including the following:
The rules provide that, if employers want to enter into a furlough arrangement with an employee which is to be backdated to 1 November 2020 (which is when the extension to the Scheme took retrospective effect), they are required to have a valid furlough agreement with the employee in place by Friday 13 November 2020.
It is not clear whether this rule also applies to a period of furlough which started on 2 November 2020 or later.
Under the new rules, the new employer of an employee who that employer inherited under TUPE can only make a furlough claim in respect of that employee if the employee was employed by old or their new employer on 30 October 2020 (a correction from the previous guidance) and transferred from the previous employer to the new employer on or after 1 September 2020. An RTI submission must have been made to HMRC (by either their new or old employer) between 20 March 2020 and 30 October 2020.
We are not sure why the 1 September 2020 date is relevant.
Under the old furlough scheme, the view was taken that employers could make furlough claims for employees who were serving out their notice periods.
The Government is however now apparently reviewing this position, and may change the rules in respect of any notice periods starting on or after 1 December 2020 (with further guidance promised by the end of this month).
This approach is likely to encourage employers to serve notice on employees this month, which does not seem to meet the aims of the extension to the Scheme.
If an employer has made employees redundant, or they stopped working for their employer, on or after 23 September 2020, the employer can re-employ them and put them on furlough, under the new rules.
Whilst this initially seems to be a good way of keeping employees in post, we would recommend that advice is sought on the specific circumstances. Some issues to consider include:
In summary, the extension of the Scheme is to be welcomed as a way of saving jobs and improving cashflow for employers. It is a pity however that the rules were not set for the whole of the furlough extension period right from the beginning, and that the rules were not published before the extension period started, as any uncertainty makes it considerably harder for employers to plan for the future.
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