On 31 October 2020, it was announced that the Job Retention, or furlough, Scheme was to be extended into December. Below are some key FAQs concerning what we currently know about the extension.
Why was the scheme extended?
Originally launched in March 2020, the furlough scheme was expected to end on 31 October 2020, to be replaced by a new scheme, the Job Support Scheme, from 1 November. However, as a result of recently announced national lockdown restrictions in England, the furlough scheme has been extended across the UK and the Job Support Scheme postponed.
How does the extended scheme work?
Like before, you place staff on a period of ‘furlough’, meaning they do not work at all, or work less hours than usual, but are retained on your books. This is an alternative to making staff redundant.
From November, the government then pays 80% of their wages, up to a cap of £2,500 per employee per month. You do not have to top up their wage, meaning that if an employee is placed on ‘full furlough’ and does no work for you, all you will need to pay is National Insurance and employer pension contributions.
Employees can work part-time whilst furloughed, otherwise known as ‘flexible furlough’, however you will need to pay them in full for the time they work.
How do I claim the grant?
The government will publish further guidance on how to calculate an employee’s normal pay, as well as guidance on how to make the claim. When claiming the grant for furloughed hours, you will need to report and claim for a minimum period of 7 consecutive calendar days.
Which companies are eligible to use the scheme?
All employers with a UK bank account and UK PAYE schemes can claim the grant. From November, you will not need to have used the furlough scheme before.
Do I need to have furloughed employees before?
No. From November, employees can be furloughed for the first time provided they meet other eligibility criteria.
Which employees can be furloughed?
To be eligible to be claimed for under this extension, employees must be on your PAYE payroll by 23:59 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.
Although we are waiting for further guidance, if this extended scheme continues to operate in the same way as previously in terms of scope, furloughed workers will include agency workers, office holders (including company directors) and salaried members of Limited Liability Partnerships (LLPs).
Do employees need to agree to be furloughed?
Yes. In all cases, you should discuss the situation with employees and agree with them that you are designating them as a furloughed worker, either under full furlough or flexible furlough.
What if I have already agreed to place staff on the Job Support Scheme?
As the Job Support Scheme has been postponed, you should now re-visit those agreements to confirm to employees that, during their nonworking hours in November and for as long as the extended JRS lasts, or until working conditions change, they will be classed as being on furlough under the JRS, rather than the Job Support Scheme, and the payment arrangements of the extended JRS will apply. The overall result of this is that employees will receive a higher rate of pay under the JRS.
Can employees do any work during furlough?
Previous rules outlined that employees were prohibited from providing services to you, or an associated organisation, that generated revenue whilst furloughed. This means that, if furloughed employees are asked to conduct work, they need to be paid in full for it and the hours they work not included in any claim for the government grant.
It is expected that the previous rules regarding finding work elsewhere will continue to apply, however, confirmation is needed. This means that employees can obtain work with another employer when they are on furlough with you provided that their employment contract allows for it.
Can furloughed employees take annual leave from November?
Further guidance is needed on this, however, it is expected that annual leave will operate in the same way as under previous furlough rules. These rules confirmed that annual leave continues to accrue during furlough and that employees should be paid in full for their leave. This means that, should the old rules apply, you will need to top up holiday pay for furloughed workers by 20%.
Courtest of Croner https://croner.co.uk