Further detail of the extended Job Retention Scheme was confirmed last week, along with guidance on flexible furlough.
I won’t cover the basics of furloughing employees as I’ve confirmed that in previous updates, these are the main points from July onwards. There are some important changes that you need to be aware of, so I’ve highlighted these in bold text
1. Can I claim under the Job Retention Scheme?
You can claim for any employees you have furloughed if you have:
- furloughed that employee for at least 3 consecutive weeks between 1 March and 30 June 2020
- a UK PAYE scheme started on or before 19 March 2020
- enrolled for PAYE online
- submitted a report under the Real Time Information (RTI) reporting system for that employee on or before 19 March 2020
- a UK bank account
Further guidance on if you can claim can be found here
2. Which employees can take flexible furlough leave?
From 1st July, you can agree a part time working arrangement with your furloughed employees. 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.
The exception is if the employee has returned from maternity, shared parental, adoption, paternity or parental bereavement leave after 10 June, then they can be furloughed for the first time, as long as you have made a claim (for another employee) in a previous period.
July, the maximum number of employees that you can claim for cannot be higher than the maximum number you claimed for in a previous period. E.G. if your highest single claim for periods up to 30 June was for 250 employees, then you cannot claim for more than this number in later periods.
Those shielding or with caring responsibilities can be furloughed as long as they have been furloughed for at least three weeks at some point before 30th
Employees who are sick or self-isolating should still get SSP, and you may be able to reclaim
for the first two weeks of SSP. Sick employees can also be furloughed as long as they have been furloughed for at least three weeks at some point before 30th
June. Note that the Scheme is not intended for short-term absences from work due to sickness.
Further detail on which employees you can furlough here
3. 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.
4. How do the furlough claim periods work?
From July claims must be in the same calendar month and must last at least 7 days (unless it’s the beginning or end of the month).
You cannot overlap claims from 1st July.
By that, I mean that if you have someone on furlough in June into July, the current claim ends on 30th
July and a new one begins. So, if will have to make a claim for June a new one from July. This means that the claim period may differ from your usual payroll period. You can only make one claim in each calendar month.
The claim ending on 30th
June must be made by 31st
Note that for flexibly furloughed employees, you will need records of how many hours the employee worked during the claim period.
More guidance here
5. How do I calculate my employees’ wages?
You should pay your employees their normal wages for hours they work for you. You can pay 80% of pay for the time they are furloughed, or make this up to 100%.
Holidays should be paid at 100%.
If employees are to be flexibly furloughed, work out the usual* hours, the actual hours worked and the furloughed hours. This is simple if the employee has fixed hours and the pay does not vary, however if the hours are usually variable, there’s guidance available here
*The usual hours are based on the contracted hours at the end of the last pay period on or before 19th March 2020
. Guidance and examples here
If employees remain fully furloughed i.e. not carrying out any work for you, there is no need to work out usual hours, calculate pay based on the maximum wage amount
To work out what you need to include in terms of additional pay, guidance is available here
. This could include
For periods starting on or after 1 August you will not be able to claim a grant towards the employer Class 1 NICs
you’ve paid on the grant for your employees’ wages.
There is a handy calculator
on the .gov website to help you with your calculations.
6. What records should I keep for those on furlough leave?
I’m always banging on about keeping evidence of monies paid and grants received. Do remember that you need your employees’ agreement to be placed on furlough leave. Your document should be in writing, but it is not necessary to get it signed. I suggest at least an email from the employee agreeing to the leave is sufficient. Keep the document, and evidence of the employees’ agreement for 5 years.
For those on flexible furlough, you will need to record their usual hours (see above), their worked hours and furloughed hours.
Retain the following records for 6 years:
- Amount claimed in each claim period for each employee
- Claim reference number
- Your calculations of how you worked out your claim
- Usual hours worked, for those flexibly furloughed
- Actual hours worked, for those flexibly furloughed
7. What are the employer contributions to the furlough scheme?
|No employer contribution – Gov to pay up to £2500 per month, plus employer NI contributions (NICs) and pension contributions
|No employer contribution for hours furloughed – Gov to pay up to £2500 per month, plus employer NI contributions and pension contributions. Employer will pay normal pay for any hours worked under the flexible furlough scheme.
|Employer to pay Class 1 employer NICS and pension contributions
|10% towards wages (Gov will pay 70%) and Class 1 employer NICS and pension contributions
|20% towards wages (Gov will pay 60%) and Class 1 employer NICS and pension contributions
The scheme ends on 31st
8. What do I do about holidays during furlough?
A reminder that employees on furlough continue to accrue holiday entitlement and can take holiday without disrupting their furlough.
I’ve already advised a number of clients on how to manage accrued holiday for those who are furloughed. It is a good idea to consider compelling employees to take holidays on certain dates in order to prevent a barrage of holiday requests when they return to work. You must give notice of at least twice the period of the leave if you want to do this e.g. two weeks’ notice for one week’s leave. I also suggest confirming this in writing and allocating specific days. Remember that you need to top up any period of holiday to 100% pay.
If you include bank holidays as part of your holiday entitlement, and employees usually take these off, then do ensure that you pay these at 100% pay – we’ve had four in the ‘lockdown’ period so far – 2 in April and 2 in May. If you have not paid these at 100% but want to treat them as holidays, you can still backpay them by making up the difference. I would advise your employees this is what you have done to save confusion. If you have not paid them, but want to leave them as holiday, that’s no problem, just add them to the accrued holiday allowance to be taken at another time.
Employees who take holiday should not be any worse off for doing so. If an employee has varied hours or pay, for example, then their holiday should be paid at the average rate over the last 52 weeks. Guidance here
Usually, it is not permitted to carry forward the 4 weeks (EU law) holiday entitlement (unless on some kind of permitted leave preventing them from taking it). However, in response to Covid-19, emergency legislation was passed to enable employees to carry forward holiday to the next two holiday years. Note that furloughed workers are unlikely to need to carry this forward as leave can be taken in the furlough leave period.
More guidance on holiday and pay during Covid-19 can be found here
9. What do I do now?
If you have employees on furlough now, decide if and how you want to bring them back to work. If you decide to bring them back on a part time basis, do ensure that you discuss this with them and put any agreement in writing – happy to help with this. Other options are:
- Rotate employees on a shift rota e.g. a week working followed by a week of furlough
- Part time working
- Bring back part of your workforce and leave the rest on furlough.
Whatever you decide, please do give me a call to discuss and I can help you put something in place.
Other considerations are health and safety, mental health and employee wellbeing – to be covered another time.
Do note that this is guidance only and should not be treated as legal advice. Always check individual contracts and if necessary seek specific advice.