Fixed-term contracts and furlough leave?

In the ever-changing world we currently live in and circumstances like we’ve never seen before, it’s important to stay positive and up to date on new guidance being released almost daily. The Government will slowly close acknowledged cracks in the Coronavirus Job Retention Scheme. One of the most recent updates surrounds fixed-term contracts and how this will affect furlough leave options. 

Original guidance didn’t cover this issue however, this gap has now been closed. So,

Can you extend a fixed-term contract that comes to an end while the employee is furloughed?

The answer is YES!

Guidance published by HM Revenue and Customs on the Coronavirus Job Retention Scheme states that employers can choose to renew or extend a fixed-term contract that comes to an end during a period of furlough. The employer can continue to claim the lower of 80% of the employee’s regular wages or £2,500 per month under the scheme.

The guidance does not require the employer to show there was a business need to keep the employee on.

The employer must renew or extend the contract before it comes to an end – If a contract is renewed or extended after it has expired, the employer will not be able to make a claim for the employee under the scheme for the new period.

The HMRC guidance states that an employer cannot claim for a fixed-term contract that ended, and was not renewed or extended, on or before 19thMarch 2020.

Should you require any additional information on these unprecedented matters, please don’t hesitate to get in-touch with the Cluer HR team on 01386 751740 or email [email protected]

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