We are all just about getting to grips with the new concept of furloughing, a brand-new word and concept introduced into UK employment law in the wake of the coronavirus pandemic and lockdown. In a short space of time there has been lots of learning in this new concept, but it is fair to say we all seem rather comfortable with it now, which of course means that…..it’s time for a change. Oh, how the Government like to keep us on our toes (and why always on a Friday evening – employment lawyers like weekends too!)

Never fear, we have delved into the detail of the scheme and can now provide our whistle-stop tour of all the “need to knows” of the changes to the furlough scheme from 01 July, so you don’t have to spend hours in a dark room with more Government guidance!

Generally speaking, there are 4 key areas of change come 01 July:

  • Scheme closing to new entrants
  • An increasing mandatory employer contribution kicks in from 01 August – click here to read the detail on this or click here to watch my F-Word webinar where I discuss the detail on this, as it won’t be covered in this note.
  • Flexible furloughing available from 01 July
  • Changes to minimum periods of furlough
  • Record keeping and paperwor
  • Changes for making a claim to HMRC

Lots to cover, and below I will provide an over-view but as we know the devil is in the detail, so I would recommend you join me for my weekly F-Word webinar this Thursday at 9.30am where I will discuss this in much more detail. Click here to register.

Scheme closing

There will be no new entrants allowed into the Coronavirus Job Retention Scheme (the Scheme) after 30 June 2020. This means that the workers has to have completed their initial 3 week period of furlough by no later than 30 June 2020. It doesn’t mean that they have to actually be on furlough on 30 June/01 July, but that they have completely at least one period of the required 3 weeks before that date. This means that last date to furlough someone for the first time was 10 June 2020.

You will have until 31 July 2020 to submit all claims for the period prior to 01 July, so make sure you don’t miss the boat.

So, from 01 July 2020, you will only be able to claim under the Scheme for any workers that you re-furlough. That means those who have already completed a period of 3 weeks of furlough before this date.

However, the rules of the Scheme go even further than this. Going forward, the number of workers who you are claiming for under the Scheme in any one pay period, cannot exceed the maximum number of workers you have claimed for in any pay period prior to 01 July 2020. So you may have claimed for 50, 65 and 40 employees throughout for the pay periods of April, May and June respectively. Going forward, the maximum number you can claim for in any one pay period will be 65. This is the case even if you have rotated furlough,

meaning the total number of employees furloughed exceeds 65. Essentially meaning that you couldn’t have all employees on furlough at any point in one pay period. So, some careful “jiggery pokery” (technical term!) may be needed if this applies to you, when we start to look at flexible furlough and getting employees back to work (below).

Remember this relates to claiming under the Scheme and not necessarily the ability to furlough, its just access to the cash that’s closing(!)

  • Number you can claim for in any one pay period can’t exceed max amount in any pay period prior to 01 July

Flexible furloughing

This was the big one we were all waiting for and we now have the guidance, although it is very loose.

The Government announced on Friday that they want to give employers the maximum possible flexibility in bringing workers back into work from furlough. This means that you can bring your employees back to work for any amount of time, and any work pattern whilst still being able to claim the furlough grant for any hours your flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.

Essentially, employers can agree with their workers what and how they come back to work. But remember you don’t have to. After 01 July 2020 you can still keep your staff on full-time furlough, if you don’t need them back at work. Flexible furlough is an option only.

If you do want to take advantage of the new flexible furloughing option, the key is that you have to agree this with your workers (or reach collective agreement with a trade union), and this should be in writing. So, this is very much an action point – you will need a new furlough agreement. Chances are that your current agreement states that the worker will not do any work for you whilst on furlough, because prior to July this is central to the Scheme. So, of course we will need to change this to allow workers back to work anyway, and its crucial for flexible furlough to have a written agreement that:

  • Is consistent with employment law; and
  • You keep for 5 years.

But that’s not the end of the record keeping. You will also need to keep the following records (in writing):

  • How many hours your workers work;
  • How many hours they are furloughed for (i.e. not working)

Flexible furlough agreements can last for any period of time, and you can have multiple flexible furlough agreements if required. However, unless otherwise specified the period that you claim for must be for a minimum claim period of 7 calendar days (see more below).

It remains a condition that for any time the employees are furloughed for, they cannot do any work for you, so you can’t claim the grant from the Scheme for any time they are actually working – you have to pay them for this.

Clearly there is more to be discussed here, such as how to calculate a worker’s “normal working hours” and “normal pay” and whether you are able to agree a pay reduction for hours worked, with those affected workers. I will cover all of these in detail during my F-Word webinar this week at 9.30am on Thursday – click here to register your place. If you can’t make that time, the recording and slides will be available on our Coronavirus hub shortly after – click here to access the hub with all my previous webinar recordings

Minimum periods of furlough

Currently, workers must be furloughed for a minimum period of 3 weeks in order to be eligible for a grant under the Scheme. Now that employers have the flexibility to agree flexible working arrangements with their previously furloughed employees, if that works for their business, it would be a nonsense if employers were still bound by the 3-week minimum furlough period.

So, sensibly from 01 July 2020, the minimum furlough period is no more. This is in-keeping with the Government’s pledge to give employers as much flexibility as possible, to get the economy re-booted. This means that employers are free to agree working patterns such as “one week on, one week off” which they previously couldn’t reconcile with their claim under the Scheme.

The only caveat to this is that any periods of furlough that started before 01 July 2020 are subject to the old rules. This means that they must last for the minimum of 3 weeks, but the new rules will trigger for any further periods of furlough.

Record keeping and paperwork

As I have explained above, there are certain requirements for keeping of records, especially if you are taking advantage of the flexible furlough option.

Broadly speaking there are 2 types of records that you need to ensure you have. The first relates to the employee’s furlough journey and the other relates to an accurate capture of hours.

The biggest plea I would make here is – please don’t forget about the usual employment law principles. Where you are making contractual changes, which clearly working time and pay are, then you must ensure you have agreement to this from the affected employee, and this should be evidenced in writing. This is backed up by there being a requirement to have flexible furlough agreed in writing, and so my action point here is to revisit your existing furlough agreements with your workers.

The second requirement to keep records relates to a capture of time, to ensure you have a record of all hours worked and all hours the worker spends on furlough. Clearly you will need this information in order to calculate the furlough claim under the Scheme.

The starting point is that you therefore need to calculate usual working hours for each worker, and the calculation depends on the type of worker and what their usual working time looks like. This will depend on whether they worked fixed or variable hours (more on this in my webinar on Thursday – click here).

You also need to record actual hours the worker works. This has to be accurate in fact, not just what you agreed they would work. As we all know, these things can change, so make sure you record the actual hours the employee works.

Once you have calculated usual working hours, and have recorded the actual hours they worked, then you can do a simple calculation to calculate the hours you would claim of furlough. The calculation is as follows:

Usual working hours – hours worked = furloughed hours

Clearly this may be an easy task for a smaller employer where fewer employees are involved, but for larger employers with numerous workers on furlough, all potentially working different patterns and hours, this may be a more of a goliath task. So, having a clear method of calculating and recording these hours is going to be key. It will also make the claim under the Scheme a much more straight forward task.

If workers are fully furloughed then you do not need to work out their usual and furloughed hours and instead you should continue to work out the “maximum wage amount” as you have been doing throughout.

Making a claim to HMRC

Obviously, a lot will change after 01 July, and this is going to have a knock on effect on what information you need to give when making a claim under the Scheme. If you have followed the advice above about the calculations to do and the records to keep, making the claim should be easy as you will have all the information to hand. I do however have some top tips for you:

  • Make sure that when you actually make your claim under the Scheme you have as accurate information as possible about actual working hours. Where you make the claim after the hours have been worked you are more likely to capture accurate data.
  • If you do make a claim based on predicted hours of work, and the employee works longer (hence reducing the furloughed hours) you will have to declare this and repay any overclaims (which you can do when you make your next claim under the Scheme).
  • Claims can no longer overlap months, so there should be at least 1 claim per calendar month. Claims must start and finish in the same month. It may therefore be worthwhile looking at when you make your claims and adjusting your pay periods to a shorter time.
  • The minimum pay period is one week.
  • You can only claim for a period of fewer than 7 days if the claim period includes either the first or last day of the calendar month, and you have already claimed for the period immediately before it

Summary

Whilst having the flexibility to start to get some employees back to work, is welcomed by many employers, the new rules inevitably cast some confusion over what we had got into a clear in our minds about furlough. We have some time to get our heads around it but my best advice, as always, is that planning is essential. Be prepared with a plan and you will rarely fail. Join me on Thursday morning to discuss the detail and I am also happy to deal with any questions you may have. Click here to register.