Furlough scheme remains open

It is unlikely that the third lockdown will not impact on the car sale figures and consequently, on the dealers’ ability to sustain the payroll. 

The furlough (Coronavirus Job Retention Scheme) has not been changed and remains open until 30 April 2021.

The scheme will continue to subsidise 80% of wages to the cap of £2,500 per months for employees on furlough, the employer pays NI and pension contributions. 

The furlough remains flexible and the employer and employee may agree any pattern of work hours, which will be paid in the normal way, with the remaining balance of unworked hours to the number of usual worked hours being covered by the furlough scheme.

A furlough claim may be made for employees who were employed on 30 October 2020 and remain in employment, as long as there is a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

As an exception, if someone’s employment was terminated (including by redundancy) on or after 23 September 2020, this employee may be re-employed and placed on furlough. This applies as long as the employee was employed on 23 September 2020 and a PAYE RTI submission to HMRC was made between 20 March 2020 and 30 October 2020 with payment notification in respect of this employee.

The recent guidance from the government concerning the third lockdown published on 4 January 2021 advises that employees who are clinically extremely vulnerable should not attend work. These employees may be put on furlough, which should be given careful consideration.

As a reminder, for employees to be placed on furlough, their employment contract should be varied by agreement, a confirmation of this variation should be provided in writing and a copy of this confirmation should be retained for 6 years.

To avoid ambiguity, we suggest an agreement should be made in writing for the employee to be placed on furlough and variation of their employment contract accordingly. The templates below may be used for this agreement.