COVID-19 Furlough Scheme Update

COVID-19 Furlough Scheme Update

The Government announced new rules starting from 1st July on what, why and how you can claim furlough pay under the Coronavirus Job Retention Scheme (CJRS) for your staff. Below we have provided some useful information to consider when these new rules come in place and how they will affect the use of the scheme.

• You can now start a claim for July on the first of the month instead of after the 14th.
• 31st July is the deadline for making any claims relating to the periods before 30th June.
• The CJRS will close on 31st October 2020.

Changes from 1st July

From 1st July, employers can bring furloughed employees back to work on a part-time basis and they are given the flexibility to decide the hours and shift patterns of their employees. However, you need to keep a record of the workdays and the furlough days for each employee you brought back to work on a part-time basis.

As per the current rules, employers can still apply for the grant for the periods they do not work. This will allow employers, especially in the retail and leisure trades who are now mostly being allowed to reopen, to bring employees back to work but also send them home if the stores are not as busy as they had expected.

From 1st July you cannot claim furlough pay for an employee for the first time. Employers can only claim furlough pay for employees which they already furloughed in a prior period (i.e. a furlough start date at least prior to 10th June 2020).

Changes from 1st August

• employers must pay 80% of each employee’s wages up to £2,500, which will be repaid via the grant.
• the employer’s national insurance and any pension contributions will no longer be repaid through the grant.

Changes from 1st September

• employers must pay 80% of each employee’s wages up to £2,500.
• the employer’s national insurance and any pension contributions will no longer be repaid through the grant.
• the grant will only repay 70% of the employee’s wages up to a cap of £2,187.50.

Changes from 1 October

• employers must pay 80% of each employee’s wages up to £2,500.
• the employer’s national insurance and any pension contributions will no longer be repaid through the grant, and
• the grant will only repay 60% of the employee’s wages up to a cap of £1,875.00.

Furlough and Holiday Pay

Please note that employee holiday pay is accruing as normal throughout the furlough period. If staff booked holidays already, then these days will come out of their holiday allowance as normal.

Employees also have a right to cancel planned holidays under normal employment rights.

Employers are allowed to require employees to take holidays within the furlough period by giving twice as much notice in advance as the holiday period itself. For example, if you would like staff to take a two-day holiday then you need to give four days’ notice to do so. Similarly, if you would like to cancel a planned holiday for a member of the staff, then you will need to give notice in advance at the same number of days as the holiday period (i.e. two days’ notice for a two-day holiday).

It is recommended for an employee’s normal accruing of holiday allowance to be used up pro-rata according to the amount of time whilst on furlough each mount. This will avoid an employee accruing a full holiday entitlement for the whole year and taking that holiday upon returning. However, the employer and the employee can agree to what might be considered ‘fair’ use of the employee’s holiday entitlement.

Other factors to be considered

The abovementioned changes are contractual employment changes and so you need to consider employees’ rights when making these decisions about who to furlough.

Employees still have the same rights at work, including:

• Statutory Sick Pay
• annual leave
• maternity and other parental rights
• rights against unfair dismissal
• redundancy payments

Grants cannot be used to substitute redundancy payments and HMRC will continue to monitor businesses after the scheme has closed.

Employers do have the right to be selective in who to furlough and under what methodology. If staff are off sick, eligible for sickness pay or other statutory pay like parental leave, self-isolating, or have variable contracts like zero-hours or part-time, then the circumstances will need to be considered carefully.

How we can help

At the Jonathan Lea Network, we advise on a variety of employment and HR issues, including advising on redundancy rights, amending furlough agreements and employment agreements and/or provide legal assistance and guidance in negotiations with employees/employers.

If you would like to discuss any of these issues further please send an email to wewillhelp@jonathanlea.net or complete this form to arrange a 20-minute free consultation.