The Furlough Scheme Continues – guidance from the experts!
Alison Colley, a solicitor and Managing Director of Real Employment Law Advice – one of the souths top HR and employment law specialists – has this advice for businesses who want to understand the current furlough scheme.
The Furlough Scheme Continues
Following the government announcement that the furlough scheme will be extended full guidance is awaited, however there are some key points that you will need to know.
- Crucially, any business can use the scheme and neither employer nor employee needs to have previously used the scheme in order to use it now.
- Employers must pay 80% of wages for time not worked, i.e. when the employee is furloughed.
- There is no additional contribution required, the government will pay the full 80% that you must pay to furloughed employees, up to a cap of £2,500.
- Employers are required to pay National Insurance and Pension Contributions.
- Flexible furlough is available, meaning employees can work some of their normal hours and Employers can make a claim for 80% of pay for the remaining time not worked.
- Employees must have been on the employers’ PAYE payroll by 23:59 on 30th October 2020. Meaning an RTI submission must have been made for them on or before the 30th October 2020.
- Calculations for pay and hours will broadly follow the same method as previously used under the scheme (exact detail awaiting confirmation).
- Minimum report period of 7 consecutive calendar days.
- Employers need to keep a record of the hours worked and usual hours they would be expected to work in a claim period.
- Employers can top up wages if they wish.
- There will be no gap in eligibility for support between the end of the old scheme and this new extension scheme, meaning you can start using it immediately.
What steps do you need to take now?
1. Write to staff to seek agreement for a continued period of furlough.
Many employers will have already written to employees to tell them that the furlough scheme was ending, and their period of furlough or flexible furlough would be coming to an end. You will therefore need to enter into a new agreement with them for the new period of furlough extension.
We have produced a Free Template Letter which you can use – download your free copy HERE.
2. Communicate plans if your business is one that must close.
If your business is one that must close after the lockdown starts (Wednesday at midnight) then notify staff as soon as possible what your plans are to prepare and what will happen once you have closed.
3. If you are staying open, do you need to furlough or flexibly furlough any staff? If so, how are you going to decide who is furloughed or not.
If your business is going to remain open but you need to furlough or continue to flexibly furlough employees, then notify them in writing.
4. Speak to your accountant/bookkeeper/payroll provider to ensure that they are set to help you with your claims.
5. Check what other support is available for your business.
Current FAQ’s answered
I have given notice to my employees to end employment because of redundancy and this was going to take effect on the 31st October 2020, can I offer to keep them on for another month under the furlough scheme?
In an email update from HMRC (02/11/20) it states:
‘If employees were on your payroll on 23 September 2020 (i.e. notified to HMRC on an RTI submission on or before 23 September) and were made redundant or stopped working for you afterwards, they can also qualify for the scheme if you re-employ them.
Neither you nor your employee needs to have previously used the CJRS. Further details on eligibility will be provided in the next few days.’
Although you can of course re-employ under the scheme I would think carefully about whether it is sustainable for your business to do this particularly as the scheme may be extended further beyond the month (see my opinion above).
I understand why employers may want to do this, and of course it gives employees a better economic situation for the next month than a potential claim for universal credit would.
If you chose to do this then of course it would be with agreement of the employee and I recommend that you set out the position clearly in writing so that they understand that employment will still end for redundancy reasons on a specific date.
I have a new employee who started at the end of September who has not been furloughed before can I do so now?
The only requirement is that they were on the books with you (on payroll) by the 30th October 2020. Therefore, assuming you have put them on the payroll already then you can furlough and claim.
My business is new, we only started in August so I have not claimed under the furlough scheme before, can we claim now as we have to close our business?
The scheme rules as currently published (01/11/20) state that any business can use the scheme and you do not have to have done so before. As long as your employees are on the payroll by the 30th October 2020 then you can use the new ‘extended scheme’.