Furlough: Important Update
The government has announced important developments regarding the furlough scheme. These include the closure of the scheme to new entrants, the introduction of employer contributions and new flexibilities allowing employees to do some work whilst on furlough.
Below we take a look at some of the key points to be aware of:
Employees need to be on the furlough scheme by 10th June 2020
The furlough scheme will close to new members on 30th June 2020. After this date, employers will only be able to furlough employees who have already been furloughed for the minimum period of three weeks. Therefore, the last date on which employers can furlough employees for the first time is 10th June 2020. It’s important that employers consider now whether they will need to furlough any / any more employees so they do not miss the closing date. Employers should seek advice from Kingfisher Professional Services Ltd before furloughing any employee.
The furlough scheme will become more flexible which will be welcomed by many employers, particularly as more sectors begin to open again. Currently, employees are not permitted to undertake work for their employer under the rules of the furlough scheme. However, from 1st July 2020, a month earlier than previously announced, this is set to change.
Employers will be able to bring furloughed staff back to work for any amount of time and on any shift pattern, but continue to be able to make a claim under the furlough scheme for any normal hours not worked by them. The employer must pay employees in full for hours worked- employers cannot claim under the furlough scheme for those hours. To be eligible for the furlough grant, employers must agree with employees any new flexible furlough working arrangements and confirm that agreement in writing. When claiming the grant for furloughed hours employers will need to report and claim for a minimum period of a week.
We do not yet have a full picture of how flexible furlough will work. The government has stated that further guidance on flexible furloughing and how employers should calculate claims will be published on 12th June. We will of course keep you up to date with further developments.
Employers to contribute to the cost of the furlough scheme from August
As expected, employers will be required to make contributions towards furloughed employees’ 80% (capped at £2,500) furlough pay as the scheme is gradually tapered off before closing on 31st October 2020.
- In July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee doesn’t work.
- In August, the government will pay 80% of wages up to a cap of £2,500 and employers will pay ER NICs and pension contributions for the hours the employee does not work.
- In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
- In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
As furloughed employees can return to work on a part-time basis from 1st July, the new caps will be proportional to the hours not worked.
In light of the developments regarding the furlough scheme it will be important for employers to assess their anticipated staffing needs, for most employers this will involve considering a number of matters including:
- How much work you currently have available
- What changes you anticipate there will be in terms of workloads and when you think these might occur
- Which departments and employees may be affected and how
- Whether it would be advantageous to your organisation to place any/any more employees on furlough before the scheme closes to new entrants
- Whether the furlough scheme is affordable for your organisation
It’s important for all employers to take advice on the facts of their situation before taking any action such as changing employee’s working hours or placing employees on furlough.
If you require advice on ay employment law matter, please do not hesitate to contact Kingfisher Professional Services Ltd, as we are happy to help.