Employers will need to designate affected as furloughed workers, and notify their employees of this change.
They must note that changing the status of employees remains to existing employment law and, depending on the employment contract, may be subject to negotiation. This means that in the absence of any contractual rights to contrary, employers would be wise to seek agreement from staff about furloughing before doing so.
We recommend all employers seek advice from employment and HR legal specialists before going through this process and my template furlough letter should be used in accordance with applicable employment law and legal guidance. SJC+0 takes no responsibility for the use of the basic template letter provided.
We encourage all business owners to read HMRC’s guidance for employers and business owners, which can be found on the gov.uk website.
This provides helpful advice on minimising the spread of infection and what to do if one of your staff presents symptoms.
Update 2 June 2020
From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. This is a month earlier than previously announced to help support people back to work.
Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.
The scheme updates mean that the following will apply for the period people are furloughed:
- June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
- August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
Update 9 June 2020
The Ending of the Scheme
The Coronavirus Job Retention Scheme was originally scheduled to finish at the end of June. This has been extended until the end of October. It is critical for employers to understand the relevant dates and the fine detail. The key dates are outlined below.
The final date by which an employer can furlough an employee for the first time is 10 June. The full furlough scheme closes to new entrants on 30 June but there must be a full 3-week furlough period completed before then for employees to continue to qualify. Employers who have employees they wish to furlough but have not yet done so, must keep a careful record to show that the employee was furloughed on or before 10 June.
So you have until tomorrow to furlough any employees you haven’t already.
If I can help in any way just get in touch.
Update 16 June 2020
What is a flexible furlough?
From 1 July 2020, employers can bring furloughed employees back to work for any amount of time and any work pattern.
You will still be able to claim the furlough grant for the hours your flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.
How do I put employees on flexible furlough?
From 1 July 2020, only employees that you have successfully claimed a previous grant for will be eligible for more grants under the scheme.
This means they must have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020. For the minimum 3 consecutive week period to be completed by 30 June, the last day an employee could have started furlough for the first time was 10 June.
You should have a discussion with employees who you wish to place on the flexible furlough scheme because you will need to agree the arrangements of their part time work. The agreement should be confirmed in writing and you must keep a written record of the agreement for five years.
You do not need to place all your employees on furlough. In addition, you can continue to fully furlough employees if you wish.
How long can flexible furlough last?
Flexible furlough agreements can last any amount of time. This means that they do not need to last for a minimum of 3 weeks. However, the period that you claim for must be for a minimum period of 7 calendar days. Any flexible furlough period of less than this cannot be claimed for via the scheme.
Employees can enter into a flexible furlough agreement more than once.
What do I pay an employee on flexible furlough?
You will pay the employee for the hours they work, along with national insurance contributions and pension contributions for those hours.
The scheme will allow you to recover the remainder of wages to a maximum cap. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.
The amount that the scheme will cover will begin to decrease from September 2020, and you will be responsible for all of the national insurance and pension contributions from August 2020, regardless of the employee being on flexible furlough.
Claims under the new scheme will be open from 1 July 2020.
When claiming for employees who are flexibly furloughed you should not claim until you are sure of the exact number of hours they will have worked during the claim period. This means that you should claim when you have certainty about the number of hours your employees are working during the claim period. If you claim in advance and your employee works for more hours than you have told HMRC about, then you will have to pay some of the grant back to HMRC.
What records do I need to keep?
You’ll need to keep records of how many hours your employees work and the number of hours they are furloughed during flexible furlough. For example, you will need to record that an employee who normally works for 37 hours a week is actually working for 15 hours and is furloughed for 22 hours.
Can my employees work for me during ‘down time’ in flexible furlough?
During flexible furlough, employees are not allowed to do any work for you or any linked or associated organisation during the periods that you record them as being on furlough.
Employees on flexible furlough can do training during the hours that they are recorded as being on furlough, but must be paid at least national minimum wage for those hours.
How do I calculate normal working hours?
If your employee is flexibly furloughed, you’ll need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period.
There are two different calculations you can use to work out your employee’s usual hours, depending on whether they work fixed or variable hours.
You should work out work out usual hours for employees who work variable hours, if either:
- your employee is not contracted to a fixed number of hours
- your employee’s pay depends on the number of hours they work
Where the employee’s working hours are fixed, or their pay does not vary with the amount of hours worked, the reference period for calculating their hours is the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.
Where an employee works variable hours, you will use the higher of:
- the average number of hours worked in the tax year 2019 to 2020
- the corresponding calendar period in the tax year 2019 to 2020.
Finally if you need to have a chat with me please contact me. I can do zoom calls, FaceTime or just the normal phone call. Don’t bury your head in the sand, talk to me, and stay safe.