As part of our series of webinars to support our clients during the current pandemic, on 18 June 2020 we hosted a webinar looking at the new flexible furlough arrangements and what they mean for your business.
Whilst the COVID-19 crisis is ongoing, businesses are now beginning to re-open workplaces and think about their needs both on a short, medium and longer term basis.
In anticipation of this and in order to continue supporting our clients during this difficult time, we are running a series of webinars to offer practical advice for those now contemplating the next phase of managing their businesses during the current situation.
This was our second session in this series and focused on the new flexible furlough arrangements and what they mean for your business. The key takeaway points are set out below:
What flexibility do employers have to bring staff back to work?
- From 1 July 2020, employers will be able to bring workers back to work on a part time basis if appropriate whilst still claiming under the Job Retention Scheme (Scheme) for any of the worker’s normal hours which are not worked.
- Workers will be able to work as much or as little as the business requires. They can work for any amount of time and on any shift pattern, and it will be possible to have different working patterns for different periods depending on the needs of the business.
- Employers will be responsible for paying workers’ wages in full while they are in work (including paying the tax and employer NICs due on those amounts).
- Importantly, claims under the Scheme from July onwards will be restricted to those employers currently using the Scheme and to those workers who have already been furloughed for 3 consecutive weeks anytime between 1 March and 30 June.
- The exception to this is that any individuals returning from statutory parental leave after 10 June 2020 can still be put on furlough leave for the first time as long as their employer has previously submitted a claim under the Scheme in respect of at least one other worker.
- Where employees transfer to a new employer under TUPE after 10 June, the new employer is able to put them on flexible furlough provided the previous employer had put them on furlough leave before 10 June and they have been furloughed for at least 3 weeks.
- If a period of furlough leave started in June, it must last for a minimum of 3 weeks before any flexible furlough arrangement can be entered into.
- For claims starting on or after 1 July, the maximum number of workers an employer can claim for cannot be higher than the maximum number they have claimed for in a previous claim period.
What steps do employers need to take to implement flexible furlough?
- Employers must agree the terms on which a worker will return to work either directly with the worker or via a collective agreement with the trade union. The agreement must be set out in writing and should be kept for 6 years in line with other records which need to be retained.
- If there is a change to the agreed working pattern once flexible furlough has started, a new written agreement should be entered into to confirm the new arrangements.
How should claims be made in respect of flexible furlough?
- Employers must claim for a minimum of a week and will need to submit data on the usual hours an employee would be expected to work in a claim period, the actual hours worked and the hours not worked when on furlough. HMRC guidance sets out different calculation methods depending on whether the individual has fixed or variable hours. The cap on the grant will be proportional to the hours not worked.
- Employers have until 31 July to make claims in respect of the period up to 30 June. From 1 July, claim periods will no longer be able to overlap months.
- The amount of the grant available under the Scheme will be tapered as follows:
- From 1 August the grant will still cover up to 80% of wages up to a cap of £2,500 per month but employers will have to cover the employer NICs and pension contributions on the furlough pay;
- From 1 September the grant will cover up to 70% of wages up to a cap of £2,187.50 per month but employers will have to cover the additional 10% of wages (to ensure the employee still receives 80%) as well as the employer NICs and pension contributions on the furlough pay;
- From 1 October the grant will cover up to 60% of wages up to a cap of £1,875 per month with employers having to cover the additional 20% of wages as well as the employer NICs and pension contributions on the furlough pay.
- The Scheme will close on 31 October.
How does flexible furlough affect redundancy, holiday rights and sick pay?
- Continuation of the Scheme with limited employer contributions makes it harder to justify redundancies before 31 October but not impossible. Employers will need to decide whether the support offered through the Scheme provides a sufficient alternative to making redundancies.
- Workers on furlough continue to accrue annual leave and can carry over the minimum 20 days annual leave for up to 2 years if it is not reasonably practicable for them to take it in the current holiday year due to coronavirus.
- Annual leave can also be taken during furlough provided employers “top-up” the grant so that the worker receives full pay for any period of annual leave. Employers can also require leave to be taken provided the appropriate notice is given.
- An employee who becomes sick can either remain on furlough and in receipt of their furlough pay or can be moved onto sick leave and be paid statutory sick pay together with any contractual sick pay to which they are entitled.