Furloughing Employees From 1 July 2020: Help and Advice for Employers
As an emergency measure related to the current Coronavirus pandemic, the UK government introduced the Coronavirus Job Retention Scheme (CJRS) – a process for businesses to furlough employees. The intention is to help employers from all sectors retain their staff where the Coronavirus pandemic has compromised the nature or volume of available work. The CJRS is now significantly revised with changes taking effect from 1 July 2020 – including the introduction of flexible furloughing – while working towards a wind-down of the scheme by the end of October 2020.
Staying up to date with policy changes and understanding the workings of the furlough scheme is of paramount importance to employers in navigating a business through these unprecedented times. This guide provides an update and summary on how the CJRS is changing with effect from 1 July 2020.
What does furloughing employees involve?
Furloughing staff is a new arrangement for UK businesses to help employers retain staff who are unable to work due to coronavirus (COVID-19). Furloughed employees are kept on payroll, and until 31 July 2020 employers can claim 80% of their usual monthly wage costs in the form of a grant from the Government, up to a maximum of £2,500 per employee plus the associated employer National Insurance contributions and minimum pension contributions.
Employers – at their discretion – can choose to supplement the Government contribution with top ups to take it up to employees’ usual salary. Employees cannot undertake work for the business during the time they are furloughed.
Until 30 June 2020 any initial period of furlough must be for a minimum period of three weeks. This means that if employees have not already been furloughed for a minimum period of three weeks before 30 June 2020 employers can no longer furlough employees, unless an employee is returning from maternity or other family leave.
Changes to furlough with effect from 1 July 2020
With effect from 1 July 2020 flexi-furlough is introduced; this means that employees can be brought on and off furlough (provided that they have been furloughed for a prior period of at least three weeks before 30 June 2020 – with an exception for employees returning from ‘family’ leave). Some key information on flexi-furlough that you need to know:
- Any existing three-week furlough period needs to be completed before flexi-furlough starts
- A new ‘flexi-furlough’ agreement must be reached and recorded
- There is no minimum period and employees can work any combination of shifts, days or hours
- Employers will be responsible for employee wage costs for working hours. Claims for furlough hours will be calculated based on ‘actual’ compared to ‘usual’ hours of work
- Claims can only be made once per calendar month, for a minimum 7-day claim period
- Government calculation guidance and the calculator has been updated to show examples and enable calculations for employees who are flexi-furloughed
- Records of usual hours and actual hours work need to be maintained and retained for six years
- Employers cannot claim in any period for a number of employees in excess of those in any previous claim
Further changes to furlough with effect from 1 August 2020
- With effect from 1 August 2020 the level of grant will be reduced with employers meeting the cost of employers NICs and pension contributions
- With effect from 1 September 2020 employers also have to contribute 10% of wages
- With effect from 1 October 2020 employers wage contribution increases to 20%
I want to continue to furlough my employees. What do I need to do?
You can continue to fully furlough employees, in line with the furlough agreement, and any updates, that you have already reached with them.
Where your business needs are such that you now have some work for individuals to do, flexi furlough will be an option from 1 July 2020. There are four simple requirements for employers who want to flexi-furlough under the CJRS. Employers planning to flexi-furlough staff must:
- Reach a new agreement with the affected employees to flexi-furlough
- Make changes to the existing employment contract in writing and retain evidence of the agreed changes for five years
- Keep a record of hours of work and hours of furlough and retain this evidence for six years
- Ensure that any claim encompasses the whole of a calendar month
Who can I furlough?
Employers can now only furlough employees who have been previously furloughed for at least three consecutive weeks between 1 March 2020 and 30 June 2020 (with an exception for employees returning from ‘family’ leave and military reservists on a period of mobilisation). The last day an employee could have started furlough for the first time was therefore 10 June 2020. Employers will have until 31 July 2020 to make any claims for claim periods up to 30 June 2020. The number of employees that can be claimed for in any claim period starting from 1 July 2020 cannot exceed the maximum number of employees claimed for under any claim ending by 30 June 2020. This may differ if there is an employee returning from ’family’ leave or a military reservist on a period of mobilisation.
Employees who are shielding, those needing to stay at home with someone who is shielding or employees unable to work due to caring responsibilities can continue to be furloughed if they have been previously furloughed.
The decision to furlough an employee rests with the employer. Staff cannot choose to furlough themselves, but they can ask employers to consider using the scheme.
How long can employees be furloughed for?
Until 1 July 2020, any employee placed on furlough leave has to be furloughed for a minimum of three consecutive weeks. However, from 1 July 2020, agreed flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once. Where a previously furloughed employee starts a new furlough period before 1 July 2020, this furlough period must be for a minimum of three consecutive weeks, regardless of whether the three consecutive week minimum period ends before or after 1 July 2020. After this the employee can then be flexibly furloughed for any period. However, after 1 July 2020, employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the period up to 30 June 2020.
Although flexible furlough agreements can last any amount of time, the minimum period that can be claimed for must be seven calendar days (unless otherwise specified).
What rights do furloughed employees have?
Furloughed employees retain all the same rights at work, including:
- Statutory sick pay
- Annual leave
- Maternity and other parental rights
- Rights against unfair dismissal
- Redundancy payments
Are furloughed employees entitled to perks and bonuses?
No. Perks and bonuses can only be added at the employer’s discretion and cost, and the same is true of commission payments.
While employees under furlough are not entitled to perks and bonuses, the scheme does cover their pension contribution and the employer’s contribution to their National Insurance. From 1 August 2020 the employer will need to contribute to these costs, as set out above.
How do I calculate furlough pay for a fluctuating salary?
Employers who are calculating the applicable payment for employees whose monthly wage fluctuates can identify their furlough entitlement as the highest sum out of their average monthly earnings for the period comprising the tax year of 2019-2020 before the furlough period began, or the employees earnings in the corresponding month of the previous year. Employers may find it useful to highlight to employees the fact that the government will not cover additional elements such as bonuses and commission payments as these are not covered under the scheme.
Can employees take holiday whilst on furlough?
Employees retain their regular right to statutory annual leave — 5.6 weeks — and are recommended, where possible, to take their paid holiday days as normal in their current working year. Employees can take holiday whilst furloughed and be paid holiday pay from their employer while they are on leave.
Can employers require employees to take holiday on furlough?
An employee may no longer wish to take the time off they had booked due to travel restrictions or health concerns. An employer can insist they still take the time off but it is always good practice to get agreement from the employee if possible. If an employee wishes to change the dates of their holiday, they will need agreement from their employer.
Employers retain their usual rights regarding requesting employees to take holidays and cancelling holidays, subject to the required notice being given:
- When cancelling planned annual leave, employers must give employees the same number of days’ notice as the number of booked days of annual leave
- When requiring staff to take mandatory holiday, employers must give employees twice as much notice as the number of days they will be asking staff to take
An employer might wish to take either of these courses of action to avoid build-up of unused holiday entitlement.
Can furloughed employees carry over annual leave?
An employer should be aware that carrying over untaken annual leave is now possible. For workers who have not taken all their statutory annual leave entitlement due to the coronavirus or COVID-19, they will now be able to carry over a maximum of 4 weeks’ unused leave into the next two leave years.
What if an employee has to self-isolate for 14 days after going on holiday?
The rules on Statutory Sick Pay (SSP) have been adapted in response to the coronavirus pandemic. Current government guidance states that where an employee self-isolates after entering or returning to the UK and does not need to self-isolate for any other reason, they will not be able to receive SSP.
This means that if the employee is unable to work from home they will either be on unpaid leave or may be eligible for furlough.
Can employers ask employees to work during periods of furlough?
No. Asking furloughed employees to work during periods of furlough is not permitted. As such, furloughed staff cannot provide a service or generate revenue for their employer whilst on periods of furlough. With the introduction of flex-furlough however, employees may now work for some periods of time and be furloughed for the remainder.
Employees can, however, volunteer or undertake training. An employee can take part in volunteer work if it does not provide services to or generate revenue for, or on behalf of the employer or any associated organisation. Obviously, asking employees to volunteer to do tasks which by their nature help business operations, such as providing constructive guidance to employees who are not furloughed, is breaching the conditions of the scheme.
Furloughed employees can also undertake training and carry out courses, such as online training in work-related matters like health and safety or apprenticeship coursework. During periods of work or training employers will need to be careful not to breach the National Minimum Wage legislation..
Can I require an employee to travel for work?
Many countries still have strict quarantine rules for anyone entering their borders which may prevent travel. In any event, some staff may have concerns about travel to countries where there is a risk of coronavirus. Employers should be aware of their health and safety obligations and keep travel to an absolute minimum. The government has made it clear that non-essential travel should be avoided. As has become apparent during lockdown, most meetings can be held through video conferencing. There is also the consideration of the quarantine period both in the destination country and once back in the UK (currently 14 days).
The NHS Test and Trace service
The NHS Test and Trace service is intended to help to manage the risk of the virus re-emerging as restrictions on everyday life are eased. It is vital that employers play their part by:
- Making workplaces as safe as possible
- Encouraging workers to heed any notifications to self-isolate and support them when in isolation
NHS Test and Trace does not change the existing guidance about working from home wherever possible. Workers will be told to isolate if they:
- Have coronavirus symptoms and are awaiting a test result
- Have tested positive for coronavirus
- Are a member of the same household as someone who has symptoms or has tested positive for coronavirus
- Have been in close contact with someone who has tested positive and received notification to self-isolate from NHS Test and Trace
Employers should continue to communicate with workers in self-isolation and provide support. If an employee cannot work from home, employers must ensure any self-isolating employee is being paid statutory sick pay and give them the option to use their paid leave days if they prefer. The NHS Test and Trace service will provide a notification that can be used as evidence that someone has been told to self- isolate.
For further information about the app please check the NHS COVID-19 App website.
Are employers obliged to use the furlough scheme instead of making employees redundant?
No, employers are not obliged to put any employees on furlough. It is the prerogative of every employer to decide whether it is in the best interests of the business to retain staff on a furloughed basis. Making staff redundant may be a preferable option for some employers.
If employers choose to make staff redundant, they are obliged to consider alternatives to redundancy. In the current situation, the furlough scheme would constitute a possible option in this regard. However, the decision to furlough an employee remains at the employer’s discretion, and an employee who is made redundant cannot insist on being put on the furlough scheme instead.
Misuse of furlough
Employers who think they may have accidentally misused the furlough scheme could be given a 30-day amnesty to admit their mistake under a draft bill to tackle furlough fraud, which is currently being fast tracked through Parliament. Find out more on that here.
Get in touch
The information on this page will be responsively updated in view of the latest developments in Government policy relating to the Coronavirus. If you would like to strategise any changes to your business operations that may be necessitated by the current situation — including flexi-furloughing employees — or require help putting them in place, don’t hesitate to get in touch.