New Treasury Direction Confirms Furlough Changes

Last Friday (13th November 2020), HM Treasury published the fourth in a series of directions that together form the legal framework of the Coronavirus Job Retention Scheme, commonly known as furlough.

The new direction formally extends the furlough scheme and sets out the detail of how the scheme will operate until 31 January 2021. A further Treasury Direction is expected to detail how the scheme will operate in February and March. The direction also withdraws the Job Retention Bonus, which was to have given incentive to retain employees after furlough was expected to end in October.

It is a long and complex document but the key things to note are:

• Furlough agreements must be in place before the start of the relevant claim period, though they can be varied during a claim period, and must be confirmed in writing. It is worth noting that employers should have written agreement from their employees in any event in order to avoid claims for breach of contract or unlawful deduction from wages.
• The scheme is open for employees who are not working at all or working fewer than their usual hours.
• Employers can claim 80% of hours not worked, subject to a maximum of £2500 per month (pro rata).
• It will no longer be possible to claim grants to subsidise notice periods from 1 December onwards.
• HMRC will publish names of employers claiming under the scheme with a “reasonable indication” of or the exact amount they have claimed.

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