Last reviewed 17 December 2020
Saying that he was aiming to provide certainty for millions of jobs and businesses, Chancellor Rishi Sunak has announced that the furlough scheme is to be extended until the end of April 2021 with the Government continuing to contribute 80% towards wages.
In a move to ensure firms can access the support they need through continuing economic disruption, Mr Sunak also confirmed that he would be extending the Government-guaranteed Covid-19 business loan schemes until the end of March.
These changes come ahead of the Budget, which the Chancellor has confirmed will take place on 3 March 2021.
This will, he said, deliver the next phase of the plan to tackle the virus and protect jobs, so the extensions to the business loan and furlough schemes enable businesses to plan with certainty and access support in the first few months of the New Year ahead of that further update on wider Covid-19 economic support.
The eligibility criteria for the UK-wide scheme will remain unchanged and these changes will continue to apply to all Devolved Administrations.
“We know the premium businesses place on certainty,” the Chancellor said, “so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.”
The Chancellor said he would review the employer contribution element of the Coronavirus Job Retention Scheme (CJRS) in January, but decided to bring this forward to allow businesses to plan ahead for the remainder of the winter and the New Year.
The Government will continue to pay 80% of the salary of employees for hours not worked until the end of April, he confirmed.
Employers will only be required to pay wages, National Insurance Contributions (NICs) and pensions for hours worked, and NICs and pensions for hours not worked.
The loans available until the end of March are the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme.
These had been due to close at the end of January.
The Treasury has pointed out that extending the CJRS until the end of April gives businesses certainty well ahead of the 45-day redundancy notice period, with the Budget setting out the next phase of support more than 45 days before the new end date of the scheme.
Comment by Kate Palmer, HR Advice and Consultancy Director at Peninsula
In light of today’s tiers announcement in England, coupled with the news that Wales is going into, essentially, another lockdown from 28 December, yet another extension of the furlough scheme is good news for businesses. Now expected to run until the end of April, businesses will still be able to claim 80% of furloughed staff wages until this date. Furthermore, until we are told otherwise by the Government, it looks like rules surrounding its use remain the same; employers can use the scheme for the first time if eligible.
While this is no doubt a bit of positive news in light of all the doom and gloom we seem to have seen of late; it also does suggest that the Government expects coronavirus disruption to continue for some time. To this end, employers must consider how the furlough scheme can help them, and seek guidance on how to correctly use it if necessary.