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A guide to the furlough scheme extension

The furlough scheme, otherwise known as the Coronavirus Job Retention Scheme, has been extended for a month because of the second lockdown.  

Employees will receive 80% of their current salary for hours not worked, up to a maximum of £2500. Under the extension, the cost for employers will be reduced compared to the level of the scheme in October.  

Who can apply for the furlough extension? 

No matter the size of or sector a business is in, all employers will be eligible to apply for the Job Retention Scheme extension. This will enable businesses to be more flexible with their staffing issues and allow them to bring employees back on a part time basis or furlough them full time. Companies taking advantage of furlough will still be expected to pay National Insurance and employer pension contributions, which account for approximately 5% of total employment costs.  

Key things to note about the extension 

  • The government will pay 80% of an employee's wages up to £2500. 
  • The grant must be paid to the employee in full. 
  • Employers will still need to pay NICs and pension contributions. 
  • Employers must pay the employee as normal for hours worked. 
  • Wages can be topped up by the employer at their own expense if they choose.  
  • There won’t be a gap in eligibility between the previous end-date of the Job Retention Scheme. 

Business grants also available  

In addition to the furlough extension, businesses that have been forced to close in England will be eligible to receive grants of up to £3000 a month under the Local Restrictions Support Grant. A further £1bn is being given to local authorities for one-off payments to businesses in their regions who need extra support.  

Need help with your payroll? 

If you need help understanding how the furlough scheme affects your payroll, or the member of staff who usually manages your payroll is furloughed and you need support, get in touch with Essential Payroll today on 02382 023223.  

Our experienced team is the South’s number one choice for outsourced payroll services so you can be sure your payroll will be completed accurately and on time, every time.  

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James Lattimer, Dorset Commercial Cleaning

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