Furlough, then furlough followed by a little bit of furlough

+++ UPDATED 16th November 2020 following update guidance from Government +++

Just when we think we understand the position on financial support for employing beyond Furlough, and we begin to comprehend the complexities of the new Job Support Scheme, our good friend Boris announces on the very last day of the scheme that it is being extended for another month. Cue many employers who have already made redundancies (ahead of the scheme closing) crying into their weekend wine and scratching their heads as to what happens now. Not a week later, today when the nation is busy nosying over the fence to America in what seems like a crazy day for USA politics (will he? won't he?) Rishi Sunak casually announces the furlough scheme will in fact remain open until March 31st 2021.

So forget anything you already know about the Job Support Scheme, this is postponed until after the furlough scheme ends and, let's face it, is likely to reinvent itself many times before then. So back to furlough, what do we know about the new extended scheme?

For the claim periods running to January 2021, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month, hence the scheme is more generous than the scheme that ran in September and October. Employers will only be asked to cover National Insurance and employer pension contributions.

The government will review the scheme in January to decide whether economic circumstances are improving enough to ask employers to contribute more.

Who can claim?

Claims for periods before 31st October 2020: Employers who wish to claim for a period that ends on or before October 31st 2020, can only claim for employees previously furloughed prior to 1st July 2020, unless the employee has returned from statutory parental leave. Additionally, the number of employees that can be claimed for cannot exceed the maximum number of employees claimed for under any claim ending by June 30th 2020. There is a deadline for this claim of 30th November 2020.

Claims for periods after 1st November 2020: For claims stating on 1st November 2020, the employee does not need to have previously been furloughed however they do need to have been on payroll up to 30th October 2020 with an exception for employees who were made redundant or stopped working for the company on or after 23 September 2020) and subsequently rehired. There is no maximum number of employees for claims from 1st November 2020.

As referred to above, and in accordance with the scheme, employees that were employed and on the payroll on 23rd September 2020 who were made redundant or stopped working for their employer after that date can be re-employed and claimed for. This is vital for those businesses who had already made redundancies before the end of October who would never had made such redundancies had they known the furlough scheme would be extended as those employees will be needed on the other side. Employers who are considering reinstating employees need to be mindful the scheme is NOT cost neutral for businesses who still need to pay the employers NI and employers pension, PLUS employees accrue holidays whilst on furlough for full time employees this is at least 2 days per month.

Scheme Rules

The scheme rules will remain largely the same as before, but with a number of changes:-

• NEW UPDATE: For claim periods starting on or after 1st December 2020, employers cannot claim for any days on or after 1st December 2020 during which the furloughed employee is serving contractual or statutory notice

• Employers can claim for any employees who were employed and on their PAYE payroll on 30th October 2020 (they do not need to have previously been furloughed). The employer must have made a PAYE Real Time Information (RTI) submission to the HMRC between the 20th March 2020 and 30th October 2020, notifying a payment of earnings for that employee.

• Employers will have flexibility to use the scheme for employees for any amount of time or shift pattern, furloughing employees on either a full-time or part-time basis, and will be able to vary the hours worked in agreement with the employee.

• Employees who have previously been furloughed continue to have their reference pay and hours based on the existing furlough calculations (as under the old scheme). Employees who have not previously been furloughed will have a different pay/hour’s reference period. Full guidance will be provided on 10th November, but broadly the pay is based on 80% of the wages payable in the last pay period ending on or before 30 October 2020 (for those on fixed wages), or 80% of the average payable between the start date of their employment or 6th April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins (for those on variable wages).

• Employees can be furloughed if they are shielding in line with public health guidance (or need to stay at home with someone who is shielding) or if they have caring responsibilities resulting from coronavirus, including employees that need to look after children

• As before, during hours which employees are recorded as being on furlough, they cannot do any work for their employer or any organisation linked or associated with their employer.

• There is no minimum furlough period. Flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once.

• Although flexible furlough agreements can last any amount of time, unless otherwise specified the period claimed for must be for a minimum claim period of 7 consecutive calendar days.

• To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed or flexibly furloughed. This is a vital step and must be retained for 5 years. Businesses must not be tempted to cover off the process verbally only.

• For any claims from 1st November, the claim must be submitted no more than 14 days after the month being claimed for. E.g. for furlough days in November, the claim must be submitted by December 14th 2020.

The government are updating the guidelines on an ongoing basis. We will update our guidance as and when changes are made to the scheme.

Wendy Roberts, HR Connected, a freelance HR consultant supporting SMEs with people power.

If you would like to discuss anything mentioned in this article, or need guidance and/or templates for furlough agreements, feel free to contact wendy@hrconnected.co.uk