Here’s what you need to know about the extension of the furlough scheme.

The advice in this article is up-to-date as of 17 December 2020. We will update it as the situation develops.

On 31 October 2020, the same day as the Coronavirus Job Retention Scheme (CJRS) was due to come to an end, the Government announced a second national lockdown. With that came the extension of the CJRS (through which so many employees have been furloughed since March 2020). This pushed back the proposed implementation of the Job Support Scheme (see our article here).

On 5 November 2020 the Chancellor announced that the Coronavirus Job Retention Scheme (CJRS) would remain open until 31 March 2021 for which full guidance was published on 10 November (and updated on 12 and 13 November 2020) and can be viewed here. The Chancellor has now announced that the CJRS will be further extended to the end of April 2021.

We expect to see full guidance and a further (fifth) Treasury Direction in the near future, hopefully this side of Christmas.

The fourth Treasury Direction to support the initial extension of the furlough scheme was published on 16 November 2020. It confirmed that under the extended scheme, HMRC will be publishing information about employers who claim under the scheme for December 2020 and January 2021. The information to be published will be the employer’s name and (if applicable) company reference number and the amount of the claim.

Furlough going forward

Government Contribution

The Government will continue to pay 80% of an employee’s current wages for hours not worked, up to a limit of £2,500 per month (the eligibility criteria having been left unchanged). Since September, the Government contribution had been falling each month but with the second lockdown, the scheme went back to its original contribution level of 80% (a helpful table regarding contributions can be found here).

The CJRS will therefore now continue for claims until the end of April 2021 (avoiding a possible reduction in January 2021). This is intended to give businesses greater certainty in the first few months of the New Year.

The Budget will be held on 3 March 2021 and will set out the next phase of the plan to tackle the virus and protect jobs. This has intentionally been set more than 45 days before the end of the CJRS to allow for business to meet their collective consultation obligations in the event they need to consider making 20 or more redundancies.

Calculation of Pay

Employees who were on your payroll on 19 March 2020 (i.e. for whom a real-time information (RTI) submission was made on or before 19 March 2020) or for whom you have made a valid furlough claim for a period ending on or before 31 October 2020, will continue to have their reference pay and hours based on the same calculations as for the original CJRS (see our article here).

Otherwise, calculations should be done as follows:

Usual Pay

  • For employees on a fixed salary, the 80% is calculated on the basis of the wages payable in the last pay period ending on or before 30 October 2020; and
  • For employees who pay varies, the 80% is calculated as the average between the start date of their employment or 6 April 2020 (whichever is later) and the day before their furlough period begins (inclusive).

Usual Hours

  • For employees with fixed hours, their usual hours are the contracted hours worked in the last pay period ending on or before 30 October 2020; and
  • For employees with variable hours, their usual hours will be the average hours worked between the start date of the 2020/2021 tax year (6 April 2020) and the date before their furlough period begins (inclusive).

Wage Top-Ups

Employers can still top up the employee’s wages above the scheme at their own expense, if they wish to. There remains no obligation to do so.

Employer Responsibility

Employers will remain responsible for paying the wages in full of any hours worked by the employee (including NI and work pension contributions). Only NICs and pension contribution will need to be paid for hours not worked.

Holiday Pay

Furloughed employees continue to accrue leave as per their employment contract and can still take holiday in the same way. Holiday accrual can vary upon agreement between the employer and employee, but must not be less than the statutory annual entitlement (5.6 weeks).

If a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations. More information about furlough and annual leave can be found here.

Types of Furlough

There is no minimum furlough period. Full-time and flexible furloughing will continue to be allowed under the extended scheme. Although the Treasury Direction refers to claims being made in respect of a flexibly-furloughed employee, the further detail of the Direction makes clear that there is no requirement for any hours to be worked and full-time furlough is permitted. A record of the hours worked/furloughed must be kept for six years.

Under flexible furlough, employers will need to pay employees in full as usual for any hours worked (which pay must be at least statutory National Minimum Wage). As mentioned, we await further guidance and a new Treasury Direction following this latest extension to the CJRS.

Work During Furlough

Whilst furloughed, employees cannot do any work which makes money or provides services for their employer or any associated organisation. Employees can take part in training and volunteer or work for another employer or organisation (if permitted by their contracts).

Employment Rights During Furlough

Furloughed employees retain their employment rights in relation to SSP, annual leave, maternity and other parental leave and unfair dismissal.

Employee Agreement

Decisions as to who to furlough must be made in accordance with usual employment, equality and discrimination laws. The employer must confirm the furlough arrangements in writing and whilst the scheme does not require employees to provide a written response, we would strongly advise this to record agreement to a contractual variation. Employers must keep a written record of the agreement for five years.

Furlough Claims

Claims will need to be made for minimum periods of seven consecutive calendar days.

Eligibility for Furlough*

There will be no gap in eligibility for support between the previous end-date and the extension of the scheme.

No requirement for previous furlough

The scheme will be open to employers who have not previously made a claim under the CJRS and for employees who have not previously been furloughed.

Qualifying dates of employment

To be eligible, the employee must have been on the employer’s PAYE payroll by 30 October 2020. Importantly, and as with previous cut-offs, this means that a real-time information (RTI) submission must have been made for that employee to HMRC, in this case between the dates of 20 March 2020 and 30 October 2020.

Working pattern

Employers can use the scheme to claim for employees on any amount of time or shift pattern and, as under the current CJRS rules, the employee can be on any type of employment contract.

Shielding employees and caring responsibilities

Employees who are unable to work if, following public health guidance, they are clinically extremely vulnerable or at the highest risk of severe illness from Coronavirus and following public health guidance or who have caring responsibilities resulting from coronavirus (including childcare) can be furloughed.

Sick employees

An employee on sick leave can be furloughed at the employer’s option and provided there is a business reason for placing the employee on furlough. If they are not furloughed, they must still be paid at least Statutory Sick Pay (SSP). SSP and CJRS rebates can be claimed for the same employee, but not for the same period of time.


Employees who were employed and on the payroll on 23 September 2020 who were subsequently made redundant or whose fixed-term contract expired or who stopped working for their employer can be re-employed and claimed for under the CJRS (provided the other eligibility requirements are satisfied).

TUPE or change in ownership

Employees who were employed by their prior employer on or before 30 October 2020 and transferred to their new employer, under the applicable TUPE or PAYE business succession rules, on or after 1 September 2020, can be claimed for. This applies to claim periods after 1 November 2020.

Maternity leave

Employees currently on maternity leave can be furloughed but will need to give notice to end their maternity leave early. Employees are required to give eight weeks’ notice to return early from maternity leave but an employer and employee can agree a shorter notice period. The Government guidance appears to permit that short notice can still be agreed. The employee can only be put on furlough at the end of the eight weeks or on the agreed return to work date. The guidance is not entirely clear if the date to be used here is the earlier of these two dates but as short notice seems to be permitted, our view at this stage is that such employees can be furloughed from the earlier date.

* Eligibility for the extended CJRS remains unchanged notwithstanding the extension of the CJRS to the end of April 2021.


Redundancies should still be made in accordance with the normal rules, including as regards selection, consultation (including collective consultation) and notice periods. Statutory redundancy and notice pay should be based on the employee’s normal wage, not the furloughed wage.

Grants cannot be used to substitute redundancy payments.

You cannot claim for any days on or after 1 December 2020 during which a furloughed employee is serving notice. This applies to both contractual and statutory notice periods and not just to redundancy situations but also if an employee has resigned or retired.

What next?

The portal for making claims is now open.

If you would like to find more about the process of making a claim under the CJRS, including what you’ll need and how to claim, the full guidance can be found here. Similarly, if you would like more information regarding reporting the payments, that can be found here.

The proposed Job Support Scheme has been postponed indefinitely at present and the Job Retention Bonus, which had been going to pay out in February 2021 to keep people in work until the end of January 2021, will not be paid and the incentive will be deployed at a future appropriate time. The further extension of the CJRS will likely mean a further postponement of the Job Retention Bonus.

If you would like to read our previous guidance on the CJRS, you can find that here. Alternatively, you can also check the website, which is being regularly updated.

There are going to be some urgent decisions being made across the country in the light of this development. How should any planned redundancies be handled? If pay has previously been topped up for furloughed employees, is that still possible at the same or any reduced level? What level of part-time could be offered and afforded? Careful communications will need to be drafted and issued to employees to clarify their current status.

We continue to advise many organisations on the various employment and HR considerations being faced at this time and please do get in touch if you would like any assistance.