On 29 May 2020 details of how employers would share the cost of furloughed workers were revealed with the government also announcing that greater flexibility would be introduced from 1 July 2020, a month earlier than originally envisaged. We outline what this means for employers and their furloughed employees.
- From 1 July employers will be able to bring furloughed employees back to work on a part-time or reduced-hours basis to suit their business needs; while still being able to claim under the job retention scheme for their normal hours not worked. For worked hours, employees will be paid by their employer, subject to their employment contract, with the employer being responsible for paying any tax and NICs due on those amounts.
- Employers will need to agree any new flexible furloughing arrangement with their employees with that agreement being confirmed in writing to be eligible to claim under the scheme. Businesses will therefore need to consider the terms of existing furlough agreements and how to practically bring furlough to an end.
- This flexibility will be introduced as a new scheme, with the current system coming to a close on 30 June. Claims will be restricted to employees already furloughed before this date. As such, any employers proposing to make use of the new scheme’s flexibilities will need to have furloughed these employees by 10 June at the latest, to allow them to complete the minimum three weeks required by the current scheme before it is closed.
- Employers will be able to 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 in this regard are awaited. Employers will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns. Those making claims for longer periods such as those on monthly or two weekly cycles will be able to do so.
- From August, through to the closure of the scheme on 31 October 2020, the level of government grant provided through the job retention scheme will be tapered as follows:
- June and July: The government will pay 80% of wages costs (up to a cap of £2,500) as well as employer NICs and pension contributions. Employers are not required to pay anything unless they choose to ‘top up’ an employee’s pay.
- August: The government will pay 80% of wages (up to a cap of £2,500). Employers will be required to pay employer NICs and pension contributions.
- September: The government will pay 70% of wages (up to a cap of £2,187.50). Employers will pay 10% of wages to make up 80% total up to a cap of £2,500 as well as Employer NICs and pension contributions.
- October: The government will pay 60% of wages (up to a cap of £1,875). Employers will pay 20% of wages to make up 80% total up to a cap of £2,500 as well as employer NICs and pension contributions.
- On 31 October 2020 the scheme will close.
Further guidance on flexible furloughing will be published on 12 June.
Key questions for employers include: (i) what arrangements will need to be agreed with returning furloughed employees; (ii) how can an employer effectively prioritise the health and safety of their staff; and (iii) what does the future hold after this scheme has ended? Whilst this has been a helpful scheme for many employers and employees alike there is undoubtedly a lot for employers to consider and early planning and advice will be key to ensuring a business is well informed about the next steps.
Thursfields has a team of Employment Law Experts with offices in Birmingham, Halesowen, Kidderminster, Sedgley, Solihull and Worcester. Whether you are an employer or employee, it’s important you get the right advice at the outset.
For more information call Lisa Kemp on 01905 730456 or email LKemp@thursfields.co.uk
DISCLAIMER: The materials in this guidance are provided for general information purposes and do not constitute legal or other professional advice. While the information is considered to be true and correct at the date of publication, changes in circumstances may impact the accuracy and validity of the information. Thursfields Solicitors are not responsible for any errors or omissions, or for any action or decision taken as a result of using the guidance.