With many changes to the Furlough Scheme around the corner, here we set out what employers can expect over the next few months.
Closure to New Entrants
- From 1 July 2020, employers will not be able to furlough anyone new (unless they are returning from family leave). In order to be furloughed after 1 July, the employee must have previously been furloughed for a minimum period of 3 weeks. This means that the last time an employee could be furloughed for the first time was on 10 June.
- The employee does not have to be on furlough at the end of June, they just have to have been furloughed before.
- From 1 July employers will be able to ‘flexibly furlough’ their employees. This means that employers can bring their employees back to work for any amount of time and on any work pattern. This can vary from week to week. Employers will be able to claim a grant for the hours which flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.
- Employers do not have to implement flexible furlough.
- The minimum furlough period of 3 weeks does not apply for flexible furlough after 1 July. Flexible furlough can be for any period.
- As with any furlough period, employees on flexible furlough can take holiday. The employer is required to top up the employee’s pay to their normal contracted rate.
- The employer must obtain their employees’ agreement to be flexibly furloughed. Employers must put in place a new written agreement with the employee for each period of furlough or flexible furlough. Whilst it may be possible to amend existing written agreements, the safest approach is to issue a fresh furlough agreement for each period. The employer must keep written records of the agreement for 5 years, together with the amount of hours the employees work and are not working (furloughed).
- The maximum amount of employees to be put on flexible furlough cannot be greater than the maximum number of employees an employer has claimed for under any claim ending on or prior to 30 June 2020. For example If the maximum employees on furlough in any one CJRS claim is 10, the maximum that can be put on flexible furlough is 10. As there is a maximum number of claims which can be made in each claim period, employers may wish to consider whether to rotate employees on furlough to ensure that they do not exceed the maximum.
- During flexible furlough, the employer must pay the employee in full for the hours worked. The CJRS grant will remain available to claim for the hours not worked. When claiming for flexibly furloughed employees, employers should not claim until they are sure of the exact hours the employee will have worked during the claim period. If the employee works more hours than were envisaged when the claim was made, the employer will have to repay some of the grant to HMRC.
- Regardless of whether flexible furlough is used, employers will have to start to contribute to the CJRS grant from 1 August 2020.
- For August 2020, the Government will cover 80% of wages up to the £2,500 per month cap for hours the employer is on furlough and not working. Employers will have to pay the associated employer NICs and pension contributions on those wages themselves.
- For September 2020, the Government will cover 70% of wages up to a cap of £2,187.50 per month for the hours the employee is on furlough. Employers will have to pay the additional 10% of wages to make up a total of 80% up to the cap of £2,500 (plus employer NICs and pension contributions on the total wages).
- For October 2020, the Government will cover 60% of wages up to a cap of £1,875 per month for the hours the employee is on furlough. Employers will have to pay the additional 20% of wages to make up a total of 80% up to the cap of £2,500 per month (plus employer NICs and pension contributions on the total wages).
- In addition, the monthly cap will be prorated to reflect the proportion of hours the employee is on furlough as against their usual hours.
Rohan Solicitors LLP are able to provide employment law advice on a range of matters to both employers and employees. We can draft furlough and flexible furlough agreements.
Please get in touch with our Employment team on 01444 450 901 or email firstname.lastname@example.org, for further information.