8 IMPORTANT THINGS YOU NEED TO KNOW ABOUT FLEXIBLE FURLOUGH …
The Government have confirmed that the new flexible furlough scheme will come into force from 1 July 2020. There are a number of important changes that employers need to be aware of in advance of the commencement of the new scheme. This update will highlight some of the most important points:-
1. WHAT IS CHANGING?
From 1 July employers will be able to bring back ELIGIBLE employees for any amount of time and on any work pattern, while still being able to claim the grant for the hours not worked. This grant will be based on the ‘usual hours worked’ (see point 6 below) less the hours actually worked during the period.
2. WHICH EMPLOYEES ARE ELIGIBLE FOR THE NEW SCHEME?
To be eligible for the scheme, employees must have been furloughed for a period of at least 3 consecutive weeks between 1 March and 30 June 2020. The only exception to this is where employees return to work after taking maternity, shared parental leave, adoption, paternity or parental bereavement leave (subject to conditions).
3. MINIMUM FURLOUGH PERIODS
If an employer decides to re-furlough someone between 10 – 30 June 2020, they MUST wait 3 whole weeks before that employee can be moved on to the flexible furlough scheme, even if that 3 week period ends after 1 July 2020. For example, if an employee is re-furloughed on 22 June, they would have to remain fully furloughed for 3 consecutive weeks until 12 July. After this date the employee can be flexibly furloughed for any period.
4. FURLOUGHED EMPLOYEE LIMITS EFFECTIVE 1 JULY 2020
The number of employees that can be furloughed at the same time during any claim period from 1 July cannot exceed the maximum number of employees that have been claimed for in any claim period prior to 1 July. This may present difficulties to those employers who have furloughed staff on a rotational basis. For instance, if an employer has furloughed two groups of 50 on a rotational basis, say 50 in April and a different 50 in May, the maximum number that can be flexibly furloughed and brought back part time in a claim period under the new scheme is limited to 50 in total.
PLEASE speak to us as a matter of urgency if this is the case for your business!
5. FURLOUGH CLAIM PERIODS
All claims relating to periods ending on or before 30 June 2020 must be submitted by no later than 31 July 2020. Claim periods starting on or after 1 July 2020, cannot overlap different months. Therefore, the claim periods must start and end in the same calendar month. Claim periods must also last a minimum of 7 days. It is recommended that claim periods match the payroll processing periods.
6. WORKING OUT WHAT TO PAY YOUR EMPLOYEES UNDER THE NEW SCHEME
If employees remain fully furloughed after 1 July, the amount that you pay them will be subject to the same rules as before. This won’t change. However, if you decide to furlough employees on a part time basis, you will need to work out how many hours an employee usually works (based on periods prior to 19 March 2020) and offset this against the number of hours they have actually worked in the claim period. The difference will fall under the furlough scheme. Calculating the historical hours worked by an employee and the deemed ‘usual hours’ can be a very complicated process, especially if the employee works varied hours. We have already assisted many businesses on this front and can of course provide help as and when necessary.
7. AGREEING FLEXIBLE FURLOUGH ARRANGEMENTS WITH EMPLOYEES
The Governmen’ts updated guidance clearly states that employers need to have a NEW written agreement in order to confirm any new flexible arrangements with employees. The employer should also ensure that they have evidence that the employee has agreed to any new arrangement. Employers should ensure that they engage the relevant HR/employment law professionals in order to meet all their obligations in this regard.
8. HOW IS THE GOVERNMENT’S CONTRIBUTION TO THE SCHEME CHANGING UP TO 31 OCTOBER 2020 (END DATE)?
We have summarised below how the Government and employer contribution is changing between July and October 2020.
JULY 2020
There is no change to the contributions for the month of July.
The Government will still contribute 80% of an employees wages (up to £2,500 per month pro rata) relating to their furloughed hours, plus any associated Employers NIC and Pension costs on those furloughed wages.
The employer should pay the employee for the hours they actually work, plus at least 80% of their ‘usual wages’ (up to £2,500 per month pro rata) for the hours they are furloughed or flexibly furloughed.
AUGUST 2020
From August the only change will be that the government will no longer contribute towards the Employers NIC and Pension costs.
The Government will still contribute 80% of an employees wages (up to £2,500 per month pro rata) relating to their furloughed hours.
The employer should pay the employee for the hours they actually work, plus at least 80% of their ‘usual wages’ (up to £2,500 per month pro rata) for the hours they are furloughed or flexibly furloughed. They will also have to cover all Employers NIC and Pension costs.
SEPTEMBER 2020
From September the Governments contribution to furloughed wages will start to reduce. The employer should continue paying the employee 80% (up to £2,500).
The Government will contribute 70% of an employees wages (up to £2,187.50 per month pro rata) relating to their furloughed hours.
The employer should pay the employee for the hours they actually work, plus at least 80% of their ‘usual wages’ (up to £2,500 per month pro rata) for the hours they are furloughed or flexibly furloughed. They will also have to cover all Employers NIC and Pension costs.
OCTOBER 2020
From October the Governments contribution will reduce further.
The Government will contribute 60% of an employees wages (up to £1,875.00 per month pro rata) relating to their furloughed hours.
The employer should pay the employee for the hours they actually work, plus at least 80% of their ‘usual wages’ (up to £2,500 per month pro rata) for the hours they are furloughed or flexibly furloughed. They will also have to cover all Employers NIC and Pension costs.
THE SCHEME COMES TO AN END ON 31 OCTOBER 2020.