Flexible Furlough

On 12 June, the Government released further guidance on how the flexible furlough scheme will operate from 1 July 2020. This scheme is an adaptation to the original Job Retention Scheme, and has been designed as a way to assist employers bring furloughed employees back into work on a  part time basis while still being able to claim financial assistance from the Job Retention Scheme.

What is a flexible furlough?

From 1 July 2020, employers can bring furloughed employees back to work for any amount of time and any work pattern.

You will still be able to claim the furlough grant for the hours your flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.

How do I put employees on flexible furlough?

From 1 July 2020, only employees that you have successfully claimed a previous grant for will be eligible for more grants under the scheme.

This means they must have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020. For the minimum 3 consecutive week period to be completed by 30 June, the last day an employee could have started furlough for the first time was 10 June.

You should have a discussion with employees who you wish to place on the flexible furlough scheme because you will need to agree the arrangements of their part time work. The agreement should be confirmed in writing and you must keep a written record of the agreement for five years.

You do not need to place all your employees on furlough. In addition, you can continue to fully furlough employees if you wish.

How long can flexible furlough last?

Flexible furlough agreements can last any amount of time. This means that they do not need to last for a minimum of 3 weeks. However, the period that you claim for must be for a minimum period of 7 calendar days. Any flexible furlough period of less than this cannot be claimed for via the scheme.

Employees can enter into a flexible furlough agreement more than once.

What do I pay an employee on flexible furlough?

You will pay the employee for the hours they work, along with national insurance contributions and pension contributions for those hours.

The scheme will allow you to recover the remainder of wages to a maximum cap. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.

The amount that the scheme will cover will begin to decrease from September 2020, and you will be responsible for all of the national insurance and pension contributions from August 2020, regardless of the employee being on flexible furlough.

Claims under the new scheme will be open from 1 July 2020.

When claiming for employees who are flexibly furloughed you should not claim until you are sure of the exact number of hours they will have worked during the claim period. This means that you should claim when you have certainty about the number of hours your employees are working during the claim period. If you claim in advance and your employee works for more hours than you have told HMRC about, then you will have to pay some of the grant back to HMRC.

What records do I need to keep?

You’ll need to keep records of how many hours your employees work and the number of hours they are furloughed during flexible furlough. For example, you will need to record that an employee who normally works for 37 hours a week is actually working for 15 hours and is furloughed for 22 hours.

Can my employees work for me during ‘down time’ in flexible furlough?

During flexible furlough, employees are not allowed to do any work for you or any linked or associated organisation during the periods that you record them as being on furlough.

Employees on flexible furlough can do training during the hours that they are recorded as being on furlough, but must be paid at least national minimum wage for those hours.

How do I calculate normal working hours?

If your employee is flexibly furloughed, you’ll need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period.

There are two different calculations you can use to work out your employee’s usual hours, depending on whether they work fixed or variable hours.

You should work out work out usual hours for employees who work variable hours, if either:

  • your employee is not contracted to a fixed number of hours
  • your employee’s pay depends on the number of hours they work

Where the employee’s working hours are fixed, or their pay does not vary with the amount of hours worked, the reference period for calculating their hours is the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.

Where an employee works variable hours, you will use the higher of:

  • the average number of hours worked in the tax year 2019 to 2020
  • the corresponding calendar period in the tax year 2019 to 2020.

Social distancing relaxed

Our long national lockdown is beginning to come to an end, Prime Minister Boris Johnson announced that the Government had decided that the social distancing rules in England could be relaxed from 4th July.

He referred to a new “one metre plus” rule that would mean people maintaining a distance of one metre (where two metres was not possible) while combining this with other measures including face coverings, regular hand washing and not sitting face-to-face.

Mr Johnson’s statement that this meant that pubs, restaurants, hotels and hairdressers could reopen from the above date.

Director General Adam Marshall warned: “While the relaxation of the two-metre rule will help more firms increase capacity, we are still a long way from business as usual. Broader efforts to boost business and consumer confidence will still be needed to help firms trade their way out of this crisis.”

For the Institute of Directors (IoD), Director of Policy Edwin Morgan was equally careful.

He said: “This change isn’t a panacea, and doesn’t mean safety can take a backseat. If anything, the onus is now even more on directors to ensure rigorous mitigating measures are in place. In some cases, this won’t be easy or cheap. With many firms already strapped for cash, the Treasury should consider supporting companies to make the necessary adjustments, particularly as some haven’t been able to access schemes so far.”

The Prime Minister had made clear that the proposed re-openings would come with a number of restrictions including venues being asked to collect contact details of customers for the NHS Test and Trace system and pubs and restaurants only being allowed to offer table service.

In other changes, up to 30 people will be allowed to attend a wedding and places of worship will be allowed to hold services. While cinemas, theatres, art galleries and museums can reopen, there will be no live performances.

Changes to the Job Retention Scheme

The Chancellor of the Exchequer, announced the following changes to the Job Retention Scheme.

The Coronavirus Job Retention Scheme was originally scheduled to finish at the end of June – this has now been extended until the end of October. There are key dates that are important for employers to understand.

10th June – This is the final date by which an employer can furlough an employee for the first time. (The full furlough scheme is due to close on 30th June, however there must be a full 3 week furlough period completed prior to this date to qualify. Records must be kept for dates of furloughing employees as evidence this was prior to the 10th June.

30th June – Until this date employers can continue to claim 80% of furloughed employees current salary, up to £2500, but the employee must not carry out any work for their employer. Employers are not required to contribute anything towards furloughed employees’ salaries for June.

1st July –  From 1st July the furlough scheme becomes more flexible – applying only for those previously furloughed – these employees can now return to work part time, but employers can still claim the grant for any normal hours not worked. The amount of working time and any shift patterns should be agreed with the employee.

1st August –  Employers will have to pay employee’s National Insurance Contributions (NICs) and pension contributions and can no longer claim a grant for these. This applies to both the hours worked and the hours not worked. Until 31st August the Government will pay 80% of furloughed employees wages up to the cap of £2,500 for hours not worked. Employers must pay their employees for the hours they work.

In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will also pay employer NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.

1st-31st October –  The Government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will also pay employer NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

 

How to treat furloughed workers returning to the workplace

With little precedent to follow, treating furloughed workers in a similar way to returning mothers may be the answer. There is a natural anxiety among employees returning to work after a lengthy period away. Pre-lockdown this was most commonly seen in women returning from maternity leave or those coming back to work after long-term sickness, yet now it will apply to great swathes of the workforce and employers will need to manage their return carefully.

Take inspiration from current policies

Most businesses have policies in place for those returning to work after maternity, paternity or sick leave, so this is a good place to start. Keeping in touch days and phased returns are common features of such policies and could be useful for handling furloughed workers. Even if you’re not planning to reintroduce some staff to the workplace for a few months, review your existing policies now and create a clear return to work plan for furloughed workers in advance.

Out of sight should not mean out of mind

When someone is on maternity leave, keeping in touch (KIT) days are a great way of making sure someone is up to date and engaged in what is happening in a business. The furlough scheme doesn’t allow for someone to carry out work as KIT days do, but the principles are the same. You should keep in touch with employees about their return to work and the developments in the business, whether that be via email to a non-work account or telephone/ video conference calls. Invite them to join social events – online catch ups, quizzes and the like. It will make their transition back into the workplace easier.

Recognise that not everything will be as it was

A lot has changed in a relatively short space of time. Businesses are kidding themselves if they think that everything will just go back to how it was. That is unlikely to happen this year, if at all. Employers are going to need to adopt unprecedented levels of flexibility to cater for factors such as reduced transport and the likelihood that large parts of their workforce will still be balancing home schooling and/or other caring responsibilities. They may also have a significant number of employees who are classed as vulnerable, or who live with someone in this category, and so who will be particularly anxious about the return to work. Phased returns will not only ease employees back into work, but for many they will be a necessity.

Listen to individual concerns and act accordingly

Some employees will be happy to return to work, but others will need more reassurance. Of critical importance will be showing that you have made the workplace as safe as it can be. This may mean introducing a range of measures such as different entrances and exits to reduce social contact, considering the use of face masks and whether they should be compulsory for all, and creating clear signs and markings to ensure colleagues keep their distance. The most up to date guidance is available on the HSE website, but make no mistake, the onus is on the employer to make the workplace safe.

There is so much for businesses to think about right now. Understandably, many will be totally consumed by cashflow. However, with heightened anxiety across all of society, businesses will need to think ahead and show their employees that they have prioritised their health and wellbeing, and are prepared to be flexible in their approach. Those that do so are more likely to be rewarded with a supportive and engaged workforce.

Coronavirus SSP Rebate Scheme to launch 26 May

The government has announced the launch of a new online service to let small and medium-sized employers claim back some coronavirus-related Statutory Sick Pay (SSP).

Originally announced several weeks ago, the government has finally confirmed when the Coronavirus SSP Rebate Scheme is set to be open for applications. The scheme covers staff SSP payments for up to two weeks of sickness absence when the absence is related to the coronavirus outbreak. Any additional, contractual sick pay is not included.

Through use of the scheme, organisations will be able to apply for rebates on SSP paid to staff who were off work due to having coronavirus symptoms on or after 13 March 2020. Rebates will also be available to staff who started ‘shielding’ in line with government guidance on or after 16 April 2020. To be eligible to apply, organisations will need to have had less than 250 members of staff on 28 February 2020.

The Scheme is set to cover any members of staff who were on a PAYE payroll scheme created and started before 28 February 2020. This includes:

  • full-time employees
  • part-time employees
  • employees on agency contracts
  • employees on flexible or zero-hour contracts.

Furloughed staff are not included as, due to being furloughed, should not be receiving SSP.

Organisations will need to make use of an online portal in order to submit claims. They will need to submit record of all SSP paid to employees that they wish to claim for, but will not need to submit evidence of illness, such as an employee’s fit note. They will also need to have a Government Gateway ID. In order to make the application process simpler, it is expected that alternative methods of applying, without using the online portal, will be announced soon.

As we head towards 26 May, organisations should work out the pay periods they wish to set and how many staff they wish to claim for in each period, alongside the amount of SSP paid. It should be remembered that the weekly rate of SSP is £95.85 as of 6 April 2020. Prior to that date, it was £94.25.

Coronavirus Job Retention Scheme **Update**

In a statement to the House of Commons, Chancellor Rishi Sunak has confirmed that the Job Retention Scheme is to be extended to the end of October. 

Sunak confirmed that, until the end of July, the scheme will continue under its current provisions. From August to the end of October, more flexibility will be added to the scheme in order to assist employees in returning to work. In this period, the following changes will take effect:

  • Employees will be able to return to work part-time and still benefit from the Scheme
  • Whilst 80 per cent of wages will still be paid to furloughed staff, the cost will be shared between organisations and the government, as opposed to the government covering the full cost.

Full details on how this will work in practice is expected at the end of May.

Closed due to coronavirus

(SMP) to be assessed according to the employee’s normal, full pay rather than their furlough pay.

The government announced new legislation which outlines that where statutory maternity leave starts on or after 25th April 2020, statutory maternity pay is to be assessed according to the employee’s usual full pay rather than their furlough pay.

It was understood that employees could be furloughed if they were on Maternity leave and that they could continue to receive statutory maternity pay. This policy needed further clarification on how the present COVID-19 retention scheme would interact with the family related leave that was already set in place.

The Statutory Maternity Pay (SMP) entitlement, along with the other family related pay schemes like parental or adoption pay are at present calculated by using the average earnings over an 8 week period. To qualify and to be eligible for SMP or SAP that employees average weekly earnings should be at the minimum equal to the lower earnings limit which is currently set at £120 per week over the 8 week test period. This period and the earnings are also used to determine the earnings-related rate of SMP and SAP for the first 6 weeks.

New legislation has now confirmed that the furloughed workers who are due to take their maternity, paternity, adoption, shared parental or parental bereavement leave after the 25th April will have their pay assessed based on their usual salary or full pay. No reductions are to be implemented from the Coronavirus job retention scheme.

Paul Scully the Business Minister has said “We’re supporting workers and the businesses in a way that the country has never seen before, in response to the unprecedented effects that COVID-19 has caused. The measures set in place are to ensure that those on the job retention scheme should continue to receive the parental leave and statutory pay that they are entitled to”

The changes that have been set in place are to ensure that the employees that intend to take time off for Maternity, Adoption, or bereavement will not lose out on entitlements to their pay as a result of being in furlough.

Companies and organisations will now have to take this into account when they calculate the amount that is payable to the furloughed staff who are due to take this form of leave. This could mean some fast recalculations of the previously worked out pay. They should also remember that the statutory rates for family leave was also increased at the beginning of April with a rise to £151.20 per week or 90% of their average weekly earnings, whichever is lower.

HMRC Portal for the Job Retention Scheme goes live tomorrow! Access the Step by Step guide in making a claim now!

HMRC are releasing the Portal for the Coronavirus Job Retention Scheme tomorrow.
 
HMRC have already released a step by step guide to assist with making a claim, to access this click the below link:
 
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/880099/Coronavirus_Job_Retention_Scheme_step_by_step_guide_for_employers.pdf
Furlough and Job Retention

Coronavirus – Furlough & The Job Retention Scheme

On March 20th the government announced plans for financial help to ease the strain on organisations and retain employees for an extended period of time. This is called the job retention scheme, as of now not much information has been given as to how it’s going to work. Here’s what we do know though!

What is the Job Retention Scheme?

The job retention scheme involves the organisation placing their employees on what the call “furlough” the term is foreign to the United Kingdom and we believe it originates from the USA. In a nutshell this means you place an employee on a temporary leave of absence, they do not have to work and receive no pay but are brought back in to work when needed.

Companies that do this will be given a grant from the Government that will cover 80% of the employees wages up to a maximum of £2500 per person per month.

 What companies is the job retention scheme available to?

The retention scheme is available to all companies and organisations there are no restrictions.

How do I get the government grant to pay staff wages?

You will first need to choose which of your employees are going to be furloughed and then submit their details to the HMRC with details of the employees earnings. You will then receive the grant to cover 80% of the employees wages. We are waiting for more information from the government about the online portal that is to be used to submit these details along with other information that may be required from you.

Rishi Sunak the Chancellor state that he hopes the first instalment of grants will be paid out to companies by the end of April 2020 and they are to be backdated to the 1st March 2020. At the moment we know that the scheme will run for 3 months with the room to be extended if needed and the coronavirus pandemic continues.

Which of my employees can be furloughed?

In most cases any of your employees can be placed on furlough. As long as they are on PAYE. The guidance states that the ability to place your employee on furlough depends on the employee contract. It is highly unlikely that your employee contracts have furlough clauses in them, however they may have the right to lay-off employees on no pay for a temporary period.

The only difference is that employees that are on layoff will get statutory guarantee pay (SGP) whereas the furloughed employees will receive the 80% of their wages. SGP is £29 per day up to a maximum of 5 days in a rolling 13 week term, this rises to £30 from the 6th of April. Furlough is a much more favourable option for employees.

If the employee contracts do not contain unpaid layoff clauses you can ask your employee to agree to be furloughed. 80% of their wages may not be as promising as full pay but it is better than making them redundant. In the wake of this COVID19 pandemic it may also be a better deal for your employees that are at present struggling with their childcare arrangements.

What if I have already laid-off some employees?

If you have done this it’s not too late to get in touch with your employees and ask them to agree to change their status from being laid off to being furloughed. This would be a simple process and involved changing their pay from zero to 80 percent of their wages, providing they haven’t already got alternative employment.

Do I need to pick certain employees?

It is totally your choice as to who you furlough. If you are not placing your whole work force on furlough you should choose wisely with careful consideration. It may be assumed that the best options are the employees in the high risk category and forcing them on to a furlough agreement without talking to them first, this could end up in a discrimination claim from your employees that claim they were forced because of their age, disability or even a pregnancy. Check out our legal implications of Coronavirus post for more information.

We believe you should ask for volunteers initially and any volunteers that come forward in the high risk category should be chose first. There is not at present a maximum number or a minimum of employees that can be furloughed.

Do I have to make up the missing 20% of the furloughed employees wages?

This is voluntary and down to you as a company to decide there is no requirement to do so.

How will the 80 per cent be calculated from a zero hour contract employee?

The Government have not given any insight to this just yet but the Chancellor stated that his intention was to try and cover as broad a group of employees as possible.

 

New laws on SSP and Annual leave

Emergency legislation promised by the Government on extending sick pay has now been passed.

The Statutory Sick Pay (Coronavirus) (Suspension of Waiting Days and General Amendment) Regulations 2020 came into force on 28 March 2020.

These Regulations remove the need for employees to serve three waiting days before they become eligible for statutory sick pay meaning that it is now payable from day one, rather than day four, where the reason for the absence is coronavirus sickness or self-isolation. The Regulations include a back-dating provision, so that any periods of incapacity which started on or after 13 March 2020 will no longer serve waiting days.

Other eligibility criteria have not changed, meaning that workers still need to earn at least the lower earnings limit on average, which is currently £118 per week but will increase to £120 per week from 6th April 2020.

In addition, the Working Time Regulations 1998 have been amended to allow for more flexibility when dealing with annual leave remaining in this leave year. Due to circumstances, workers may struggle to take their remaining entitlement before the end of the leave year. This may be because:

  • they’re self-isolating or are too sick to take holiday before the end of their leave year
  • they’ve been temporarily sent home as there’s no work (‘laid off’ or ‘put on furlough’)
  • they’ve had to continue working and could not take paid holiday

The Regulations now give workers a statutory right to carry leave over into the next two leave years after this one. This only applies to the first 4 weeks of leave under the Regulations (Regulation 13 leave). The other 1.6 weeks of statutory minimum leave is already capable of being carried over to the next leave year with agreement from the employer and the new laws do not change this. This means that all statutory minimum annual leave accrued in this leave year is now capable of being carried over, in the following way:

  • 4 weeks (legal entitlement to be carried over to next two leave years)
  • 1.6 weeks (employers can agree that this be carried over to the next leave year)
  • Enhanced contractual entitlement (at employers’ discretion)

The rules on pay in lieu of untaken annual leave have also been amended so that, when employment terminates, the holiday pay payable will include anything carried over and not taken due to the coronavirus carry over. The law still does not allow pay in lieu of statutory minimum entitlement at any time other than termination.