COVID- 19: Updated Furlough Guidance now published

French Duncan


 

Following on from our last update (see November Furlough Extension blog by clicking here), the UK Government has now published additional guidance which aims to provide a more comprehensive look at their earlier announcement to extend the Coronavirus Job Retention Scheme (CJRS) until the end of March 2021. Our HR services team have now reviewed the additional guidance and have provided their initial comments on what this means for UK businesses.

What are our initial thoughts?

The extended support being offered is generous and we are hopeful that this will help abate what had previously been expected to be an inevitable tidal wave of redundancies, which were fully anticipated prior to this financial intervention. There are hopeful signs in the economy’s performance, and the mention of scientific breakthroughs towards a vaccine, so there is now some light at the end of this dark tunnel.

Despite this, we are fully aware that this will not be a saving grace for every business and some employers will remain in a difficult predicament, where tough decisions still need to be made. However, although there are still many hurdles for businesses to overcome, there appears to be a renewed sense that organisations can pull through this challenging time and we, therefore, remain optimistic on your behalf.

Overall, the updated guidance has answered the majority of outstanding questions in regards to the practicalities of the scheme being extended. For the most part, the scheme hasn’t changed and will follow the basic premise of its predecessor. However, there are a couple of statements made within the guidance that do give some cause for concern and are therefore important for employers to be aware of and acknowledge.

Is there anything that I should be particularly aware of as an employer?

Yes. The previous furlough scheme allowed for those who were on notice of termination to be placed on furlough. This meant in practice that employers could utilise the funding to minimise the cost of redundancies as the contractual notice periods due to staff can be a significant financial burden. Whilst this remains the same at present, the newly updated Government guidance has indicated that this will change in December 2020, with more details to follow at the end of November.

Although specifics have not been provided at this stage, we expect this means that the extended furlough scheme will not permit employers to claim support during any notice period if they are dismissing staff for any reason where notice is payable (including redundancy) these costs will need to be met fully by the employer.

Whilst we appreciate the thought behind this is an attempt to protect only “viable jobs”, the reality is that employers will need to carefully consider whether redundancies are inevitable and, if so, this is likely to encourage those tough decisions to be made imminently to allow businesses to maximise the use of the funding available.

The UK Government have also indicated that from December, they will begin publishing the names of companies using the scheme. The overall purpose for doing so has not been stated, but this is likely an attempt to discourage larger businesses from participating and reducing fraudulent claims as it will help identify companies who say they have staff furloughed but are continuing to work.

Additionally, it has been stated that details will be released of which of these employers would be eligible to use the scheme from December onwards, suggesting that the eligibility criteria may be reviewed and tightened – however, the guidance does not indicate specifics or appear to show any substantive changes to date and therefore, this is something that we will need to wait and see what the Government says moving forward.

What are the main points from the updated guidance?

Full details can be found on the government website, however, a quick overview of how the scheme will operate from November onwards is as follows:

  • Employers do not need to have previously used the scheme in order to access it now, the extended scheme will be treated as a blank slate to ensure maximum coverage and support for business is available – this means there is no limit on the number of employees who may be furloughed.
  • Claims can be backdated to 1 November 2020, as long as a written furlough agreement has been established with the employee by Friday 13 November 2020.
  • Employees can be placed (with agreement) on continuously furlough, or flexible furlough where the employee will work only part-time hours.
  • To be eligible under the extended scheme, employees need to have been on the payroll on 30 October 2020 and named on the RTI submissions to HMRC between 20 March 2020 and 30 October 2020.
  • Anyone who was made redundant or stopped working by 23 September 2020 (the day before the Job Support Scheme announcement) can be re-employed and placed on furlough instead. This is not an obligation, but at the discretion of the employer.
  • Employers will be able to claim for 80% of the employee’s unworked hours (subject to a cap of £2,500 per month). Employers will pay for any hours the employee actually works, employer National Insurance and pension contributions (approximately 5% of employment costs). The extended scheme will be reviewed in January and it is likely that employers will be asked to contribute further after that date.
  • Some employees on maternity leave may wish to end this early in order to be furloughed. In this scenario the employee cannot be furlough immediately, they firstly must give 8 weeks’ notice of their return.
  • How employers calculate reference salaries to establish 80% of normal wages has been updated, and differs depending on whether someone has been furloughed before or is a new entrant to the scheme from November 2020. If you would like assistance in calculating and submitting your claims then our Payroll team would be happy to help.

Our advice?

One of the most crucial points for employers at present is to address whether redundancies will be inevitable, or whether there is genuine scope for the furlough scheme to allow time where the situation can rectify itself. Due to the impending changes, which have been hinted at within the updated guidance, the likelihood is that the new scheme will not allow for notice periods to be claimed for by employers.

This means that any employers who were thinking about using the furlough scheme to support a decision to terminate their staff would need to act quickly, as only the notice period which takes place up to the end of November would be permitted within your furlough claim.

At this stage we would recommend that employers seek to review their own situation and whether furloughing staff will be required. The flexibility of the scheme means that most employers will likely be able to access a proportion of funding in a way that suits them.

If you do wish to place your staff on furlough, it would be necessary to use an appropriate furlough agreement and confirm the arrangements with staff as soon as possible in writing. If an agreement is in place on or before Friday 13 November 2020, then you will be able to backdate your claim to the start of November.

Further to this, effective communication and engagement with remaining staff (and those who are furloughed) will be a vital element for employers as we move into these winter months. When it does come to “business as normal” organisations need to be ready to hit the ground running. Where possible take the time to speak to staff and ensure that everyone knows what is going on within the business. You should encourage line managers to make an extra effort to ensure lines of communication are truly open and don’t underestimate the significance of a small thank you gesture or spending a small amount of time throughout the week to encourage socialisation – video calls don’t always have to be about work. 

Further support

We understand that this is a particularly challenging time for employers as it can be increasingly difficult to plan when variables change on a day-to-day basis. We would recommend that you make use of the government support available to you, but do not allow these to stop you from making difficult decisions where necessary. If you are currently about to embark on a redundancy process, please do not hesitate to talk to us for further support or you may find our Redundancy Guide helpful as you consider the options.

To discuss how we can help you and your business in more detail, you can speak to a member of our HR team directly (their contact details can be found on this page), or simply email covid19@frenchduncan.co.uk and one of them can get back to you.

 

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