To help avoid redundancies, the furlough scheme offers employers 80% towards furloughed workers’ wages, up to a maximum of £2,500 a month, currently until 30 April 2021.
Employers are still required to pay National Insurance contributions and workplace pension contributions on furloughed wages.
Chancellor Rishi Sunak said: “Businesses place a premium on certainty, so it’s right we enable them to plan ahead regardless of the path the virus takes. Extending this support provides certainty and clarity.”
Another extension to the furlough scheme might be announced in next month’s Spring Budget, which will take place on 3 March 2021.
With 58 days between the Budget and the current end of the furlough scheme, employers have enough time to make informed decisions on redundancies.
If 100 staff or more are being made redundant, consultations must start at least 45 days before anyone loses their jobs. This falls to 30 days for 20 or more redundancies.
As such, the predicted tsunami of employers planning redundancies as the furlough scheme wound down was staved off towards the end of last year.
A Freedom of Information request obtained by the BBC from the Insolvency Service showed there were 23,100 redundancies planned in December 2020 – the lowest monthly figure for the year.