Furlough scheme & redundancy update

(24 June 2020)

Earlier this month the government announced the new rules and the detail for part time working under the Coronavirus Job Retention Scheme (CJRS) which will allow workers to be part furloughed and do some part time work from 1st July.

For the month of July the CJRS scheme is unchanged allowing employers to claim 80% of a furloughed worker’s salary to a cap of £2,500 per month and employment costs (employer’s NI and minimum pension contributions) from the government fund. In August employers will need to pick up the bill for employment costs and pension (but the 80% salary cap to £2,500 remains) and in September the grant will decrease to  70% of normal earnings to a cap of £2,187.50. This will reduce to 60% of normal earnings to a cap of £1,875 in October,  the last month of the CJRS. In September and October employers will have to meet the balance of wage costs (as well as pension and NI) to ensure furloughed employees receive 80% of their normal earnings up to a cap of £2,500.

Not surprisingly many employers’ minds turned to redundancy and many are now actively consulting their workforces, regrettably this includes swathes of our own clients.

Before we leave furlough altogether though we’ll recap on the latest changes announced earlier this month. This article is for general guidance purposes only and does not constitute legal advice, which should be sought on your own particular circumstances.

10th June was last orders for (most) new furloughs.

With the exception of those returning from statutory maternity or paternity leave, no new employees could  be furloughed unless they had already been furloughed for 3 continuous weeks prior to 1st July. Effectively that meant the latest date an employee could have been furloughed was 10th June.

Existing employees who had previously been furloughed can still be furloughed

Providing an employee had been furloughed for 3 continuous weeks anytime between 1st March and 30th June they can be re-furloughed at any time until the scheme ends in October…..subject to the allowable maximum number of employees (see below.)

….the maximum number of employees rules set from 1st July

From 1st July employers may only furlough as many employees as they have furloughed at any one time since the scheme began.  So if the maximum number of employees previously furloughed at any one time was 15  that is the maximum going forwards UNLESS the employer inherits new employees under TUPE OR has employees returning from statutory parental leave or from military reservist service, in which case these can be added to the total.

TUPE & furlough is still horridly complex

An exception to the ‘no new employees after 10 June’ rule is that employees transferred in under TUPE or under PAYE business succession rules can still be furloughed provided (in the case of TUPEs after 28thFeb) the new employer had claimed a furlough grant of at least 3 continuous weeks between 1st March and 30th June in respect of the transferring employees; or (in the case of TUPEs after 10 June) the employee’s previous employer (the Transferor) had previously done so.

Family leave returners can still be furloughed

Although the CJRS closed to new entrants on Wednesday, the government announced that new furloughs can still be arranged for employees returning from statutory family leave e.g. maternity or paternity leave.

Tempted to end maternity early to claim furlough leave instead of unpaid additional maternity leave?

Don’t be! It is likely to constitute fraud – only those who have served 8 weeks’ written notice of an early return will be permitted to be furloughed.

Part time working possible from 1st July – new furlough agreements needed

From 1st July employers can decide to bring furloughed workers back on a part time pattern of their choosing. If doing so employers must a) record a new agreement for the arrangement & keep this for 5 years; b) claim for periods of at least 7 days, but not longer than the calendar month (in a single claim); and c) record i) the hours worked in the claim period and  ii) the usual working hours in that period, and keep these records for 6 years.

Claim historical furlough grant by 31st July

Claims relating to the period ending 30th June must be submitted by 31st July.

Claim periods changing

While claims can be of any length up until the end of June, claims for July, August, September and October must only relate to the month in which they fall. This is because the rules change in July (part time furlough is possible from 1st July) and the levels of grant are different in each month from 1st July until the scheme closes.

Those having to shield, self-isolate, take sick leave or care for another e.g. children, can still furlough…

…but only if they have previously been furloughed for a minimum 3 consecutive weeks.

Can no longer re-employ and furlough ex-employees

The cut-off date for re-employing former employees in order to avail them of furlough leave was 10th June.

Fixed term contracts can still be extended

Where fixed term contracts expire while the employee is on furlough leave, the contract can be extended and the employee can remain on furlough leave without breaking the rules of the scheme.

Holiday normal pay

We knew this anyway, but it’s worth restressing that where holiday is taken during furlough (or required with twice the notice as for the holiday days required) it must be paid at normal earnings, not furlough pay.

Notice normal pay?

The debate is not settled by .gov guidance as to whether notice pay when notice is served on furlough leave must be 100% normal earnings, or can be paid at the reduced furlough rate of 80% of earnings. There are complex technical arguments concerning the employee’s notice period and its impact on whether there is an entitlement to full pay…we are not going to expand on those arguments here. Our advice based on morality as much as anything else is that employees should receive their notice at their normal earnings, not at 80%.

Official.gov websites

Remember, If it’s not on .gov….it’s not true! The following are a list of the official government websites for your information:

Employers look at the following .gov sites:

For a guide to the rules of the CJRS (furlough scheme) click here.

For a step by step guide to reclaiming furlough pay click here.

For wider support available for employers including loans, business rates etc. click here.

And for guidance on social distancing when you re-start your workplace click here.

Employees guidance for the CJRS can be found by clicking here.

And the self-employed should look at their equivalent scheme by clicking here.:

 

If you’re thinking of outsourcing your HR or employment law needs, why not contact myHRdept? Call us on 01628 820515 to discuss your requirements or contact us and we’ll call you back.

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