Key facts to know about the flexible furlough scheme
Who is eligible to be furloughed under the new scheme?
Only employees who have been furloughed for at least three weeks on or before 30 June under the old scheme can be furloughed after 1 July. The only exceptions to this are where parents return to work after taking maternity, shared parental leave, adoption, paternity or parental bereavement leave.
Duration of furlough
From 1 July, you will be able to bring back previously furloughed employees for any amount of time and on any pattern of work and claim a grant for the hours not worked. For example, if your employee normally works five days a week and you only need them in work for two, you can furlough them for the remaining three days. If business picks up, you might want them to work for three days and be furloughed for two.
The last date anyone could be furloughed for the first time was 10 June. If you furloughed any employee on that date, you will be able to move them onto the new scheme immediately from 1 July.
However, it is now clear that if you re-furlough someone after 10 June, you will have to wait the full three weeks before you can move them onto the new scheme, regardless of whether this ends after 1 July. For example, a previously furloughed employee starting a new furlough period today (15 June) must remain furloughed under the old scheme until at least 6 July. After this date, the employee can be flexibly furloughed for any period.
Limits on numbers of people you can furlough from 1 July
The numbers of employees you can furlough in any period starting from 1 July cannot exceed the maximum numbers of employees you claimed for under the old scheme – although you don’t include returning parents in this calculation.
This may create some difficulties for employers who have already put in place rotating furlough patterns.
You must submit any claims under the old scheme by 31 July. After 1 July, you cannot submit claims that cross calendar months. This means that if you have staff whose furlough spans June and July, you will need to submit separate claims for June and July – even if they have been furloughed continuously.
Your claim period is made up of the days you are claiming a grant for. Claim periods starting on or after 1 July must (usually) start and end within the same calendar month and must last at least seven days. You must include all furloughed staff in one claim even if they are paid at different times and the government recommends that, if you can, you should match your claim period to the dates you process your payroll.
One thing to bear in mind is that if you can submit a claim up to 14 days before the end of the relevant claim period. However, if you do this and the number of days your staff work changes, you will need to adjust the claim next time. That doesn’t sound too difficult if you’ve over-claimed, but if you’ve under-claimed, you’ll have to contact HMRC for help. The government therefore recommends that you don’t “claim until you are sure of the exact number of hours [your staff] will have worked during the claim period”.
Working out pay under the new scheme
If you don’t intend to ask staff to return to work, your pay calculations won’t change, although your contribution will increase from 1 August.
However, if your staff do return to work part-time you’ll need to work out how many hours each employee usually works and offset this from the number or hours they have been furloughed.
You will need to decide if your employee has fixed or variable hours. If their pay depends on the number of hours they have worked, or they are not contracted to work a fixed number of hours, use the variable calculation.
You will need to keep a copy of all records (one version says for five years, and the other for six years) including:
The guidance states that you need a “new written agreement” to confirm the new furlough arrangement. It’s not clear if you need separate agreements each time you flex the furlough period (which would be really cumbersome) or if you can make provision for this in one document which provides for flexibility which would make much more sense.
It is fair to say that Covid 19 has impacted all our lives in so many different ways. Many employees have been forced to work at home, whilst our key workers are still going out to work and experiencing working conditions that can only be compared to a terrifying action movie that never ends.
Employers have had to quickly enact new policies and procedures focusing on absence, health and safety, remote working, and business interaction - including travel and external meetings. Conferences have been cancelled and we are no longer able to fly half-way around the world to meet clients.
If companies are still pushing ahead with recruitment, recruitment consultants and employers are doing their best to endorse video interviews and remote induction programmes.
Questions to ponder
Evidence suggests that being able to work remotely enables employees to be more productive, care for their children and avoid stressful commutes, overall improving mental well-being.
Whilst some people react well to working from home, others find it isolating and distracting with perhaps younger children around. They may miss the face to face interaction and are generally much happier in an office environment.
While video calls can be helpful, face to face meetings with customers and colleagues are still valuable, as are overseas meetings with clients which help to build rapport and stronger relationships and gain first-hand understanding of the culture and business needs.
What this experience has taught many employers is that effective home working can be achieved. Employees still work hard and meet deadlines. Relationships with clients are still being maintained and recruitment can continue.
It is certainly interesting to reflect on how these unavoidable changes may well reshape the world of work forever.
Each April, employers must ensure that their organisation complies with the latest round of amended employment laws and deadlines. As well as dealing with the ongoing impact of coronavirus (Covid-19), important issues in April 2020 include:
Changes to written statements of terms and conditions
From 6 April 2020, the requirement to provide a written statement of terms and conditions extends to workers, not just employees. This includes casual and zero hours workers.
The right to a statement no longer requires a minimum length of service and applies from the worker’s first day working for the organisation.
There are also changes to the information that the written statement must include.
New rights to parental bereavement leave and pay
Bereaved parents of a child who dies on or after 6 April 2020 have a new right to take up to two weeks’ parental bereavement leave with pay at a statutory minimum rate.
The right, sometimes referred to as “Jack’s Law”, also applies to stillbirths occurring after 24 weeks of pregnancy.
Employers should review their organisation’s policies and procedures now to ensure that they include time off for bereaved parents. Organisations will need to communicate these policy changes as soon as possible, ideally by 3 April 2020.
New holiday pay calculations for workers with irregular hours
On 6 April 2020, the holiday pay reference period for workers without normal working hours increases from 12 weeks to 52 weeks.
Employers will need to adjust how they calculate holiday pay for workers with irregular hours, for example those in seasonal or atypical roles. Your organisation’s holiday policy may also require adjusting if it refers to the holiday pay reference period.
Employers should also check the contracts of employment of workers with irregular working hours to ensure that, where the reference period is mentioned, it is updated with the new period.
Increases to the National Minimum Wage
The national living wage for workers aged 25 and over increases to £8.72 per hour on 1 April 2020.
Other national minimum wage rates also increase on 1 April 2020, with hourly rates rising to £8.20 for workers aged 21 to 24, to £6.45 for workers aged 18 to 20 and to £4.55 for workers aged 16 or 17.
Increased rates for maternity, paternity, adoption and shared parental leave
The weekly rate of statutory maternity, paternity, adoption and shared parental pay increases to £151.20 from 5 April 2020.
It is up to employers to make sure that staff on maternity, paternity, adoption, shared parental leave and sick leave are paid these statutory minimum rates.
Increased rates for statutory sick pay
The weekly rate of statutory sick pay increases to £95.85 from 6 April 2020.
In the wake of coronavirus (Covid-19), the Government has announced that it will introduce measures requiring employers to pay statutory sick pay from the first day of an employee’s sickness, rather than after three waiting days.
Changes to the unfair dismissal award
The maximum compensatory award for unfair dismissal increases from £86,444 to £88,519 for dismissals that take place on or after 6 April 2020.
Increase in statutory redundancy pay
New limits on employment statutory redundancy pay come into force on 6 April 2020.
Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age. The weekly pay is subject to a maximum amount. This amount is £538 from 6 April 2020.
Larger employers with 250 or more employees should also be working on their third gender pay gap report.
Meanwhile, the Government has confirmed that the extension of IR35 tax rules to private-sector employers will be delayed until 6 April 2021.
As full details of the scheme are awaited, it would be unwise for employers to seek an employee's agreement to "furlough" them before the Government has published guidance and draft legislation on the scheme.
However, it is important for employers to communicate with worried employees and the reassurance of an initial letter is a good starting point.
On 20 March 2020, the Government announced the Coronavirus Job Retention Scheme to provide funds to support all employers with a PAYE scheme to continue paying employees who would otherwise be made redundant or put on an unpaid period of lay-off.
Under the scheme, if a worker is designated as a "furloughed worker", a grant will be available from HM Customs and Revenue (HMRC) to reimburse the employer for 80% of a worker's wage costs, up to a maximum of £2,500 per month. Payments can be backdated to 1 March 2020.
The Scheme is initially set to run until the end of May 2020, but the Government has said that the scheme will be extended if necessary.
The Government's guidance on support for businesses states that employers that wish to designate employees as "furlough workers" must "notify them of this change" and the change in status "may be subject to negotiation".
Unless the employer has a contractual right to lay off workers, it will need the employee's agreement to be placed on furlough leave. Similarly, the employee's agreement is needed to make a reduction in pay. However, it is highly likely that employees will agree, if the only alternatives are redundancy or unpaid leave.
During the furlough period, employees will:
A contract of employment is an agreement that exists between an employer and employee, and sets out terms such as employment rights, responsibilities and duties.
A verbal contract will automatically come into existence when a person accepts a job, but written contracts of employment will help businesses to protect themselves and reduce the risk of disputes or claims being pursued against them. While some believe that they can achieve greater flexibility without such contractual documents, this can in fact cause them serious difficulties further down the line when perhaps the relationship breaks down.
Pitfalls of ignoring your legal responsibility
In the UK, an employer is legally required to provide employees with a written statement of their terms and conditions, within the first two months of their start date.
While this is not a contract of employment, it can act as a summary of the information contained in the contractual document. It should outline essential terms and conditions, such as rate of pay, working hours, holiday entitlement and a brief job description as well as information on collective agreements, pensions and notice periods.
However, with effect from 6 April 2020 employers will be required to provide employees with their written statement of terms and conditions on the first day of work (rather than within two months) and this right will also be extended to workers.
Employers will need to review their recruitment processes and ensure employment contracts are being issued to employees and workers on or before their first day.
By failing to provide these statements, employers could face complications such as:
Drawbacks of having basic written statements
While providing employees with a basic written statement is the bare minimum a business is legally required to do, it is recommended that employers also have comprehensive contracts of employment in place.
Employers can choose to include information on their policies for computer and mobile phone use, smoking, outside interests, additional employment and expenses.
A clear and detailed contract of employment that outlines exactly what you expect from employees can help to safeguard your financial and business interests. With increased control over the terms and conditions, you can also reduce the possibility of disputes or claims being brought against your organisation. It is recommended that you regularly review and update these contracts, particularly when, for example, an employee has been promoted or your business has developed, in order for your business to remain up-to-date and properly protected from harm.