Hours before the Job Retention Scheme (the Furlough scheme) was due to be replaced by the Job Support Scheme, the government announced that the Furlough scheme was to be extended. Will Carter from BPE Solicitors, explains the key changes to the scheme.
From 1 November 2020, employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. This is the same rate that was provided to employers between April and August 2020 and is an increase on the previous two months’ % contribution.
As before, the scheme involves applying through the government gateway system to cover a portion of furloughed employees’ usual monthly salary. Employers are under no obligation to top up to 100% but will still need to cover the national insurance and pension contributions for employees. The government will be reviewing the scheme in January 2021, which may result in the percentages of wages paid by the government and employer changing, as they have previously.
The employer must confirm in writing to an employee that they have been furloughed and keep a written record for five years. Like ‘flexible furlough’, employers can furlough employees for any amount of time and any work pattern, while still being able to claim wages for the hours not worked. In flexible arrangements, working hours should be agreed with the employee. When claiming for employees who are flexibly furloughed, employers should not claim until they are sure of the exact number of hours the employee(s) will have worked during the claim period.
In order to claim for an employee, the employee must have been employed on 30 October 2020, as long as the employer has made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. The exception to this rule is that if an employer made employees redundant, or they stopped working for the employer, on or after 23 September 2020, they can be re-employed and put on furlough. This applies as long as the employee was employed and on PAYE payroll on or before 23 September 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made between 20 March and 23 September 2020.
Additionally, employers can agree retrospectively to furlough someone with effect from 1 November 2020, as long as the agreement to retrospectively claim furlough occurs on or before 13 November.
Furlough rules are also slightly different for employees returning from particular types of leave. For example, employees returning from maternity leave need to give the statutory eight weeks’ notice to end maternity leave early in order to be furloughed (and get furlough pay, typically higher than SMP).
All employers with a UK bank account and UK PAYE schemes can claim through the scheme. Employers do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020. If an employer is claiming for a period that ends on or before 31 October 2020, this falls under the old regime. Here, they can only claim if they have previously furloughed the employee before 1 July 2020 and have submitted a claim for them by 31 July 2020.
Claim periods starting on or after 1 July 2020 must start and end within the same calendar month. All claim periods starting on or after 1 July 2020 must last at least seven days unless the company is claiming for the first few days or the last few days in a month, in which case they must have already claimed for the period ending immediately before it. An employer can only make one claim for any period so they must include all furloughed or flexibly furloughed employees in one claim (even if they are paid at different times).
In addition to employees, employers will also be able to claim other types of employees – as long as they’re paid via PAYE. These employees include:
- office holders (including company directors);
- salaried members of Limited Liability Partnerships (LLPs);
- agency workers (including those employed by umbrella companies);
- limb (b) workers;
- contingent workers in the public sector; and
- contractors with public sector engagements in scope of IR35 off-payroll working rules (IR35)
One point not yet known is what happens for claims during an employee’s notice period after 1 December 2020. During the previous furlough scheme, employers were able to claim for employees who were working their notice period. The new scheme guidance contains a huge caveat that the government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods, with further guidance published in late November. Watch this space for more information.
Finally, the ‘Job Retention Bonus’, the £1,000 grant per furloughed employee kept continuously employed, has been deferred until next year as a result of the furlough scheme.
Key Takeaways on the Job Retention Scheme
- Claim 80% of wages of employees for hours not worked, up to £2,500;
- Employer still must pay NI and pension contributions;
- Employees must have been in employment on 30 October 2020 (or 23 September if they were made redundant);
- Employees may be re-employed and retrospectively put on the scheme (effective of 1 November) but this must be sorted by Friday 13 November 2020; and
- Employers must confirm in writing to the employee that they have been furloughed, agreeing hours for flexible furlough, and a written record of the agreement must be kept for five years.
What should you be doing now?
Follow the above guidance and the latest updates from the government, guidance on the Job Retention Scheme can be found here.
If you have any queries, please feel free to contact Will Carter at firstname.lastname@example.org or call 01242 248495 or another member of our Employment team.
Full details of the team and the ways we can support you can be found at www.bpe.co.uk/services/team/employment/
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