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Furlough Advice

Furlough Advice

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Following the outbreak of the Coronavirus pandemic in the UK, on 20 March 2020 the UK Government announced various measures to assist businesses and employees given the financial difficulties anticipated as a result of the pandemic. The Coronavirus Job Retention Scheme (usually referred to as the “Furlough Scheme”) was one of the measures announced, designed to assist employers with the salaries of their employees, with the hope that this may save jobs.

The Treasury Direction which set out the terms of the Furlough Scheme stated that claims could be made under Furlough Scheme where employees were furloughed “by reason of circumstances arising as a result of the coronavirus or measures taken to prevent or limit its further transmission”. When the Furlough Scheme was first announced, employers could make a claim to HMRC for 80% of a furloughed employee’s wage, up to a maximum of £2,500 a month, and HMRC also covered the employer national insurance contributions and the minimum automatic enrolment pension contributions on that wage.

Since then, there been numerous changes to the Furlough Scheme, including the introduction of “flexible furlough” and the requirement for employers to make contributions. Initially such contributions related to pension and national insurance contributions, but during September and October of 2020 employers were also required to contribute a certain percentage to bring the employee’s salary up to 80%.

Following the announcement of a further lockdown in November 2020, the Furlough Scheme was revised again and extended on a number of occasions, most recently until the end of September 2021. Under the latest revised scheme employers can claim 80% of employees’ usual wages, up to £2,500 per month, but employers still have to pay employers’ National Insurance and pension contributions. Furthermore, employers will be required to contribute 10% in July, rising to 20% in August and September, for the hours not worked by the furloughed employee.

We have set out below our responses to some of the frequently asked questions regarding the current Furlough Scheme.

For how long will the Furlough Scheme continue?

The Furlough Scheme has been extended until the end of September 2021.

What can we claim under the extended scheme?

Employers can claim 80% of employees’ usual wages, up to £2,500. The government has confirmed that this  80% government contribution will continue until the scheme closes in September 2021. Employers do however still have to pay employers’ National Insurance Contributions and pension contributions, and employers will be required to contribute 10% in July, rising to 20% in August and September, for the hours not worked by the furloughed employee.

It is important to note that where claims are made under the furlough scheme for periods starting on or after 1 December 2020, it is not possible to claim for periods during which the employee is serving out their notice, whether that be contractual or statutory notice.

Who is eligible for furlough?

To be eligible under the extended Furlough Scheme the employee must have been employed on 30 October 2020, and the employer must have made a PAYE Real Time Information submission for the employee between 20 March 2020 and 30 October 2020 notifying HMRC of payment of earning for that employee.

You can claim for employees that work for you under various types of employment contract, including full-time, part-time flexible or zero-hour contracts.

There are however different issues to consider depending on the type of employment contract, and their particular circumstances. There is a useful Government guide that allows employers to check how different employment conditions may affect eligibility for furlough, which can be found here.

Can I furlough staff now?

Yes. Under the extended scheme employers can place employees on furlough and claim under the Furlough Scheme even if they have never used the Furlough Scheme before. It is also possible to furlough employees that have not been furloughed before, provided they meet the eligibility requirements referred to above.

It is however important to note that general employment law principles still apply, and in order to place employees on furlough the employer must have the employees’ written agreement to vary their terms of employment. For further information please contact one of our team.

Can furlough be used to help employers who have childcare responsibilities?

The guidance which has been updated to reflect that the extended Furlough Scheme confirms that employers are able to furlough employees if they are unable to work, whether from home or otherwise, or are having to work reduced hours because they have caring responsibilities arising from coronavirus. The guidance provides examples of such caring responsibilities and it confirms that this would include caring for children who are at home following school closures.

What is flexible furlough?

Flexible Furlough was introduced in July 2020. Flexible Furlough enables employees to work part-time and receive pay from their employer for the hours that they work, but a furlough grant can also be claimed for the unworked hours. Flexible furlough can still be used under the extended Furlough Scheme provided that an employer puts an appropriate written agreement in place.

Where can I find out more?

Please contact our employment team for specific advice.

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