The government announced recently that the Coronavirus Job Retention Scheme (CJRS) will be in place until the end of October 2020, and that employers would now be expected to contribute to the cost of the scheme.
The government has also now announced changes to the CJRS which focuses on bringing the workforce back into businesses and winding down the scheme until it closes in October 2020. This is a new scheme called the flexible furlough scheme and these changes take effect from 1 July 2020.
What is the Flexible Furlough Scheme?
Under the flexible furlough scheme, employers can bring back previously furloughed employees for any amount of time or any shift pattern of work and still claim the furlough grant for the normal hours not worked.
This means that instead of employers furloughing their staff for all their normal working hours, employees can be brought back to work any type of part-time shift patterns as agreed between the employer and employee. For example, if an employee normally works 4 days a week and the employer only needs them for 2 days per week, the employee can be furloughed for the remaining 2 days.
Who can be Furloughed under this new Scheme?
Employers would only be eligible to furlough employees that have previously been placed on furlough leave under the current scheme. Each employee must have completed a furlough period of at least 3 weeks by 30 June 2020. The new scheme commencing 1st July 2020 is therefore only open to employees that were placed on furlough on or before 10 June 2020.
However, any employee that was previously furloughed and was re-furloughed after 10 June 2020, must complete the minimum 3-week period of furlough leave before they can be transferred to the new scheme commencing 1 July 2020. For example, an employee who had been previously furloughed starting a new furlough period today (25 June) must remain furloughed under the old scheme until at least 15 July 2020. After this date, the employee can be flexibly furloughed for any period.
This does not apply to employees returning from parental leave (maternity, shared parental leave, adoption, paternity, or parental bereavement leave), or who were reservists in the armed forces however – they can still be furloughed for the first time.
What is the duration of Furlough under the new Scheme?
From 1 July 2020, there is no minimum or maximum amount of time that an employee can be furloughed. This means an employee can be furloughed multiple times, returning to work in between times if so required, as long as it fits into the CJRS guidelines and there is a signed agreement under the new scheme by the employee.
How much can Employers claim under the new Scheme?
Nothing changes regarding the CJRS claims that employers make until 01 August 2020. Until the end of July, employers can continue to claim up to 80% of a furloughed employee’s gross salary per month, and their employer National Insurance Contributions (known as ER NICs), and their mandatory employer pension contributions.
What is the maximum number of Employees that can be claimed for under the new Scheme?
The number of employees an employer can claim for in any claim period starting from 1 July 2020 cannot exceed the maximum number of employees they had previously claimed for. However, this will be different where an employee is returning from parental leave or returning from military reserves.
Also, employers must submit any claims under the old scheme by 31 July. From 1 July, employers will not be allowed to submit claims that cross calendar months. Therefore, if there are employees whose furlough leave spans June and July, employers will need to submit separate claims for June and July, even if these employees have been furloughed continuously
Please refer to the illustration table below regarding changes to the government’s contribution and employer’s contribution for furloughed employees.
|Employer NICs and Pension Contributions|
|Wages Contribution for furloughed employees|
|Government contribution||80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875|
|Employer contribution||–||–||10% up to £312.50||20% up to £625|
|Employer contribution for flexible furloughed Employee||Payment for hours worked by Employee||Payment for hours worked by Employee||Payment for hours worked by Employee||Payment for hours worked by Employee|
|Furloughed Employee receives||at least 80% up to £2,500 per month||at least 80% up to £2,500 per month||at least 80% up to £2,500 per month||at least 80% up to £2,500 per month|
How would Employees be paid under the Flexible Furlough Scheme?
How employees are paid depends on how they have been furloughed.
- Full-time furlough: Employers would pay each employee 80% of their earnings before deductions. Of course, you can pay them more than this if you make up the shortfall.
- Flexible furlough: For each hour the employee works, an employer should pay them their usual salary, pro-rata (including all applicable NICs, pension contributions, and so on). For the hours the employee is not working i.e. the working hours in which they are furloughed – the employer must pay them 80% of their earnings and then claim the amount back via the CJRS.
What rate of pay should an employee receive during periods of work between furlough leave?
The rate of pay that an employee receives during periods of work completed between furlough leave will be based on their ‘normal’salary, including all applicable NICs, pension contributions, commissions, tips, discretionary commission and bonuses. The ‘normal’ salary will be the salary the employee received on 28th February 2020 or 16th March 2020 unless there has been a subsequent agreement between employer and employee to alter the salary through a variation to contract. Any subsequent agreement to vary the contract must be in writing and the employee must sign to confirm their consent to the new contractual term(s).
Is the New Scheme covered by the old Agreement?
No. The guidance states that a new written agreement is required with employees to confirm the new furlough arrangement under the new scheme. It would be necessary to make provisions for the flexibility that would occur regarding the varying shift patterns that employees may be required to work depending on the availability of work. This may not be a problem considering that employees are going to be paid normal wages for the hours that they work under the scheme.
Contact one of our specialists to discuss the impact of these changes on your people plans and get advice and support on your options.