Earlier on this month, the Government published some new guidance covering the changes to the Coronavirus Job Retention Scheme (the “Scheme”) from 1st July 2020. We covered these changes in our previous article, available here.
Specifically, from 1st July 2020, employers will be able to bring back furloughed employees on a flexible, part-time basis. On Friday 12th June 2020, the Government released some further information with regards to part-time working under the Scheme and we have summarised the guidance below:
- From 1st July 2020, employees will be able to come back to work on a part-work, part-furlough basis.
- The employee must enter into a new written agreement that confirms the new furlough working pattern. The employer will need to:
- ensure that the agreement is consistent with employment, equality and discrimination laws;
- keep a written record of the new agreement for 5 years; and
- keep records of how many hours its employees work and the number of hours they are furloughed (i.e. not working).
- The employee must receive their full pay for all hours worked, but can receive furlough pay for the remainder of their usual working hours which are not worked (i.e. periods of furlough leave). The grant will be subject to the relevant monthly cap (currently £2,500 gross per employee until 31st August 2020) pro-rated to the proportion of an employee’s usual working hours that the employee spends furloughed - for example, if the employee is furloughed in July for 60% of their usual working hours, the grant under the Scheme will be capped at 60% of £2,500 for that employee, i.e. £1,500.
- The calculations for employees on flexible furlough will be complicated and HMRC has provided examples for salaried employees and employees who work variable hours. For salaried employees, the calculations will be based on contracted hours worked at the end of the last pay period ending on or before 19th March 2020. For employees whose hours vary, employers will need to consider the “usual” hours they worked. This must be done by reference to the higher of either:
- the average number of hours worked in the tax year 2019/2020; or
- the corresponding calendar period in the tax year 2019/2020.
The process of calculating the hours worked/not worked and the amount that can be reclaimed from HMRC may be complex for many and we suggest that employers keep a detailed record of how any figures are reached.
- Employees cannot undertake any work for the employer during the time that they are recorded as being on furlough.
- From 1st July 2020, there is no minimum period that an employee must be furloughed for. Furlough periods which began before 1st July must be for a minimum of 3 weeks even if that minimum period ends after 1st July. For example, if you have been rotating employees on furlough on a 3-weekly basis, and one group starts a turn on furlough on 24th June, those employees must stay on furlough for a consecutive period of 3 weeks.
- However, from 1st July 2020, when an employer makes a claim through the portal, the claim period must start and end within the same calendar month and must last at least 7 days unless the employer is claiming for the first few days or the last few days in a month. Therefore, an employer can only claim for a period of fewer than 7 days if the period they are claiming for includes either the first or last day of the calendar month, and the employer has already claimed for the period ending immediately before it.
- Only one claim can be made for any given period, so all furloughed or flexibly furloughed employees must be included in one claim even if they are paid at different times. If an employer makes more than one claim, the subsequent claim cannot overlap with the other claim made. There is some helpful guidance with regards to claim periods available here.
It is important to note that the 10th June 2020 was the last day that employers could furlough employees for the first time (however this position may not apply to employees returning from maternity, shared parental, adoption, paternity or parental bereavement leave – see below). Therefore, the only employees who will be eligible to work on a part-time basis under the Scheme, will be those who were furloughed on or before 10th June 2020. This does not mean that the employee had to actually be on furlough on the 10th June, but means that they must have been previously furloughed for a consecutive 3 week period at any time between 1st March 2020 and 30th June 2020.
If an employee is returning from maternity, shared parental, adoption, paternity or parental bereavement leave after 10th June 2020, then they can be furloughed even if they are being furloughed for the first time, provided that:
- A claim has been submitted for another furloughed employee within the organisation for a period of at least 3 weeks taking place any time between 1st March 2020 and 30th June 2020;
- The employee started maternity, shared parental, adoption, paternity or parental bereavement leave before 10th June 2020 and returned from that leave after 10th June 2020; and
- An RTI submission was made by the employer on or before 19th March 2020.
Another important point to note is that the number of employees an employer can claim for in any single claim period starting from 1st July 2020, cannot exceed the maximum number of employees claimed for under any claim ending on or before the 30th June 2020. The Government website provides a helpful example to put this into context: an employer had previously submitted three claims between 1st March 2020 and 30th June 2020, in which the total number of employees furloughed in each respective claim was 30, 20 and 50 employees. Therefore the maximum number of employees the employer can now furlough in any single claim starting on or after 1st July 2020 is 50 (however, employees returning from maternity, shared parental, adoption, paternity or parental bereavement leave can be added onto the maximum number).
Finally, and by way of a reminder and summary, set out below are the key dates:
- 10th June 2020 – was the last date an employee could be placed on furlough for the first time, other than if they are returning from family leave.
- 1st July 2020 – the new flexible furlough scheme is in place. Employers do not have to pay any contribution towards the grant but will need to pay employees for hours worked.
- 31st July 2020 – all claims for the period ending 30th June 2020 must be made before this date.
- 1st August – employers will be required to contribute to employer national insurance and pension contributions.
- 1st September – in addition to national insurance contributions and pension contributions, employers will be required to pay 10% of wages (with the government contributing 70%), reduced proportionately for any hours actually worked.
- 1st October – in addition to national insurance contributions and pension contributions, employers will be required to pay 20% of wages (with the government contributing 60%), reduced proportionately for any hours worked.
- 31st October – the Scheme will close.
Practically, now is the time to start considering your workforce requirements post-furlough. If you are considering dovetailing the phasing out of the furlough scheme with a redundancy exercise, you need to start thinking about consultation requirements. The last dates for starting collective redundancy consultation and lodging form HR1 will be 16th September 2020 (if proposing over 100 redundancies) and 1st October 2020 (if proposing 20-99 redundancies).
Please contact us if you would like more information about the issues raised in this article or any other aspect of employment law at 02920 345 511 or firstname.lastname@example.org