Furlough extension
What did Boris say?
The Coronavirus Job Retention, ‘furlough’ Scheme was due to end on 31 October 2020 and be replaced by a new, Job Support Scheme. However, on 31 October the Prime Minister said that the furlough scheme will remain open until December.
The Prime Minster announced an effective, ‘lockdown’ from 5 November, which means that some businesses (such as hospitality venues and non-retail shops) will be forced to close. However, Construction sites and manufacturing workplaces can remain open. The government has advised that employees who can work from home should do so.
As a result, and depending on the nature of your business, you will need to consider the extent to which your business can remain open. If your premises can remain open and you were planning to reintroduce employees to the workplace, you will need to consider whether that is still viable given the lockdown that has been announced.
What will the government pay under the extended furlough scheme?
HM Treasury has announced that, under the extended furlough scheme, employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500.
What will I be able to claim for?
Employers will be able to claim a government grant for hours that their employees are not working, calculated by reference to their usual hours worked in a claim period. Each claim must be for a period of 7 consecutive calendar days.
Will employers have to pay anything?
Yes, employers will have to pay National Insurance and employer pension contributions for furloughed employees’ non-working hours. So, in effect, the Scheme is reverting to how it operated in August 2020.
Employers will also (obviously!) have to pay employees for any hours they do work.
So, is flexible furlough going to be an option?
Yes, businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time. But you should keep clear records so that you can demonstrate (if asked by HMRC) what hours each employee is required to work and when they are on furlough leave.
Which employers are eligible under the extended furlough Scheme?
All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the furlough scheme.
The government expects that publicly funded organisations will not use the furlough scheme, but partially publicly funded organisations may be eligible where their private revenues have been disrupted.
Which employees are eligible under the Scheme?
Employees can be on any type of contract, including zero hours, agency and fixed term contracts.
Employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
Can employers top-up wages if they wish?
Yes, employers are still able to choose to top up employee wages above the furlough scheme grant at their own expense if they wish.
When can I make a claim?
The Government will confirm shortly when claims can first be made in respect of employee wage costs during November.
Claims are likely to be made online. Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
When does the extension to the furlough scheme start and finish?
That’s not yet clear, although the Prime Minster said that the extension would last until sometime in December.
What about claims between now and the extension coming into effect?
The Government says that it will confirm shortly when claims can first be made for November wage costs. It also says that there will be no gap in eligibility for support between 31 October and this new extension taking effect.
What if I made employees redundant because I thought furlough was ending?
The position isn’t yet clear. However, when the furlough scheme was originally announced the government allowed employers to rehire employees who had been made redundant and then place them on furlough leave. We will need to await further guidance to see if the same rule will apply to the newly extended furlough scheme.
I am in the process of making employees redundant – what should I do?
A very good question! If you are in discussions with employees over making them redundant then they may well suggest you put them on furlough leave as an alternative to redundancy. As you may know, employees with over 2 years’ service have the right to claim unfair dismissal at an Employment Tribunal. As a result, if you do not place potentially redundant employees on furlough leave, they may well argue that terminating their employment is unfair. On the other hand, this extension to furlough only lasts a month or so (at the moment) so is merely a stay of execution for potentially redundant employees. Nevertheless, you may wish to pause any redundancy consultations, pending further guidance on the furlough extension.
What if I have agreed that employees will work part-time under the now delayed Job Support Scheme?
As the Job Support Scheme, which was due to come into effect on 1 November, has been delayed you will need to have fresh discussions with employees over whether now to place them on furlough leave instead. This can include a flexible arrangement where the employee works part-time and is on furlough leave for the remainder of their normal working hours.
What about employees who are Clinically Extremely Vulnerable (CEV)?
The Prime Minister said that he would be ‘asking’ CEV employees not to attend for work, if they can’t work from home. That seems to suggest something less than the shielding arrangements that were in place for CEV employees earlier in the year. However, CEV employees will have the right, under the Employment Rights Act 1996, to refuse to attend their place of work if they reasonably consider it represents a serious and imminent health and safety danger.
What should I do next in terms of employees?
You will need to:
- Consider whether or not your business can remain open during the period of lockdown and whether you can reasonably ask employees to attend for work;
- If your business is forced to close, consider what additional government support is available to you;
- Decide which of your employees can work from home;
- Review your health & safety risk assessment;
- Discuss with employees the arrangements you intend to put in place;
- Decide which employees to place on furlough leave;
- Review any written agreements with employees and put new, written furlough agreements in place if necessary;
- Ensure that you stay in touch with employees and support good mental health and general wellbeing; and
- Clearly and effectively communicate the decisions you make.