On 5 November 2020, Rishi Sunak extended the existing Coronavirus Job Retention Scheme (the Furlough Scheme) until 31 March 2021. The Government issued further guidance on 10 November 2020 and we set out below a summary of some key aspects of that guidance.
How much does the Furlough Scheme grant employers?
Up until at least the end of January 2021, employers can claim 80% of an employee’s usual salaried hours not worked, up to a maximum of £2,500 per month subject to NIC and pension obligations being deducted and paid as normal by the employer. The scheme will be reviewed for February and March 2021.
All employers with a UK bank account and UK Pay As You Earn (PAYE) scheme can claim the grant.
Employers do not need to have previously claimed for an employee before 30 October 2020 to claim for periods from 1 November 2020, as long as a PAYE Real Time Information (RTI) submission has been made to HMRC between 20 March 2020 and 30 October 2020 for the relevant employee.
Employers may retrospectively furlough an employee, with effect from 1 November 2020, so long as this is agreed with the employee in writing before 13 November 2020.
Employees on any type of employment contract can be claimed for, including those on part-time, agency, flexible, apprenticeship and zero-hour contracts, along with those on full time contracts. For the avoidance of doubt, foreign nationals who are working in the UK under any category of visa are also eligible to be furloughed.
Is there a limit on the number of claims that can be made?
Under the ‘old’ furlough scheme which ended 31 October 2020, the number of employees an employer could claim for as from 1 July 2020, was limited to the maximum number of employees for whom a furlough claim was made before 30 June 2020. However, under this ‘new’, extended scheme, as from 1 November 2020, there is no maximum number of employees who can be furloughed.
As with the ‘old’ scheme, employees need to agree to be furloughed and to not undertake any work when on ‘furlough leave’ and that agreement must be recorded in writing (and must be retained for five years).
Employees may be ‘fully furloughed’ (for all their working hours) or ‘flexibly furloughed’ (for part of their working hours) and in either case, records must be retained showing the number of hours an employee works and the number of hours they are furloughed.
There is no minimum furlough period now, which gives employers more flexibility. Flexible furlough periods (taking people off furlough and then agreeing with them that they go back on to furlough) can be agreed more than once, but all changes must be recorded.
What are employees permitted to do whilst on furlough?
Employees cannot undertake any work whilst on a period of furlough; no services may be provided to an employer’s business or associated business and employees may not do work which earns any money for an employer’s business or associated business.
- undertake training;
- volunteer for another employer or organisation; work for another employer (if their employment contract permits this); and
- participate in redundancy consultation;
- request to take holiday.
Redundancy (note of caution)
At the moment, employers can continue to claim for their employees who are serving out a contractual or statutory notice period after being made redundant. However, the Government is currently reviewing whether employers should be entitled to claim for those employees who are serving contractual or statutory notice periods and it has indicated that this approach is being reviewed and may well be changed for claims from 1 December 2020 onwards.
An employee who was made redundant, or who stopped working for their employer on or after 23 September 2020 can also be re-employed and placed on furlough by their employer. This applies so long as the employee was employed and on the employer’s PAYE payroll on or before 23 September 2020 and an RTI submission was made for the employee between 20 March 2020 and 23 September 2020.
Returning from parental leave
The Government states that the normal rules for maternity, shared parental, adoption, paternity, parental, or bereavement leave and pay, continue to apply. However there are specific provisions which apply to employees returning from parental leave, which do not apply to other employees, for instance employers can furlough an employee returning from statutory parental leave after 10 June 2020 even if they are being furloughing for the first time.
It should also be noted that employees who wish to return early from maternity leave must give eight weeks’ notice to their employer but the employer can agree a shorter period of notice. However if that employee is to enter into a furlough agreement upon their return, the employer and the employee cannot agree a shorter period of notice for an early return.
New employers (following a TUPE business transfer) can agree with the employees that it ‘inherits’ that they should go on furlough:
- if, for a period ending on or before 31 October 2020, the employees being claimed for have previously had a claim for a furlough payment submitted for them by their prior employer; and
- if, for a period after 1 November 2020, the employees being claimed for were employed by their prior employer on or before 30 October 2020 and transferred from them to their new employer on or after 1 September 2020 (government guidance wording on this particular point includes an error but the correct position is reflected here).
Under the new guidance, it has been revealed that HMRC will publish the names of employers who have made claims under the Furlough Scheme from 1 December 2020 onwards.
Should you have any questions or require any advice in relation to the Furlough Scheme, please contact Linky Trott or any member of the Employment team. In the meantime, we will continue to monitor the situation and provide updates as the situation develops.
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Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
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