Unlike the Famous Five books I read as a child, Furlough Five is not as gripping or as adventurous but there are some very important updates following the Chancellor’s most recent announcement. As we were promised we now have some, but not all, of the details of the furlough scheme until the end of October, with some changes happening earlier than anticipated.
Firstly, and very importantly, you should be aware that the Coronavirus Job Retention Scheme, or furlough scheme, will close to new entrants on 30 June. The last date that employees can be furloughed for the first time is therefore 10 June so as to ensure they complete the minimum 3 week furlough period. Only employees who have spent a full 3 weeks on furlough before this date can continue to be furloughed or work under the new flexible furlough scheme.
Flexible Furlough Scheme
From 1 July, a month earlier than previously announced, employees will be able to return to work on a part-time basis (on full pay for hours worked) whilst remaining on furlough on other days. A fact sheet has been published by the government which you can find here.
Key details of the scheme include:
- From 1 July, employers will be able to agree any working arrangements with previously furloughed employees.
- Employers must agree any new flexible furloughing arrangement with employees and confirm that agreement in writing.
- When claiming for those on furlough leave, and their furloughed hours, employers will need to report and claim for a minimum period of one week (claims for longer periods such as those on two weekly or monthly cycles can still be made).
- Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Further details about this will be released by the government at a later date.
- The cap on the furlough grant will be proportionate to the hours not worked. Employers will need to report hours worked and the normal hours an employee would work in a claim period.
- For hours worked, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and National Insurance Contributions due on those amounts.
Financial changes
From 1 August, employers will need to make contributions towards wages of furloughed staff and those contributions will increase as follows (although employees will continue to receive 80% of their current wages, up to £2,500 per month):
- For the month of August, the government contribution towards wages will remain at 80% (subject to the cap) however employers will be required to contribute employer national insurance and pension contributions.
- In September, in addition employers will also be required to contribute 10% of wages and the government will contribute 70%.
- In October the employer contribution will increase to 20% with the government contributing 60%.
As previously announced the furlough scheme will close at the end of October.
Action for employers
You should review your existing agreements with employees and determine what new agreement needs to be put in place in order to comply with the scheme changes, particularly if you are “topping up” wages (a decision which you may need to review). Remember, any new flexible furlough working arrangements must be agreed with employees and that agreement confirmed in writing.
Start to plan your resource requirements, and remember that you can agree any shift pattern with employees. There are no minimum or maximum hours that apply to the part-time arrangements.
Finally, look out for further details on how to claim under the flexible furlough scheme. These are due to be released on 12 June.