EMPLOYMENT LAW

Flexible furlough from 1st July 2020

On 25 June 2020 a further Treasury Direction was published to modify the Coronavirus Job Retention Scheme (CJRS) for the period 1 July to 31 October 2020. The Treasury Direction sets out the legal framework which underpins the CJRS. When the CJRS was announced in March 2020 furloughed employees were not permitted to carry out work of any description. However, the CJRS will change on 1 July 2020 to provide ‘flexible furlough’ with further changes commencing on 1 August 2020 to introduce the obligation on employers to contribute towards furlough pay until the CJRS closes on 31 October 2020.

 

The purpose of the CJRS

Previous HMRC guidance has stated that the CJRS applies where businesses have been so ‘severely affected’ by the pandemic that they cannot maintain their workforce. However, the latest Treasury Direction goes somewhat further than this, stating that its purpose is to enable

“the employer to continue the employment of employees in respect of whom the CJRS claim is made, whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.”

This suggests that if an employer’s business has not been ‘severely’ affected by the pandemic that an employer may be able to keep ‘shielding’ employees furloughed for example. Arguably, this description also enables employers who are unable to put social distancing measures in place to keep their staff furloughed. However it should be noted that any employee will have to have already completed a minimum furlough period of 3 consecutive weeks prior to 1st July 2020 to be eligible for the scheme (see below).

Since the introduction of the CJRS we have received many queries from both employers and employees as to whether shielding employees have a ‘right’ to be furloughed. Ultimately, the decision to furlough any employee is a decision for the employer, however employers must consider their duties pursuant to The Health and Safety at Work (NI) Order 1978 (which stipulates that a safe place of work must be provided for employees) and The Health Protection (Coronavirus, Restrictions) Regulations (Northern Ireland) 2020. We recommend that employers conduct a risk assessment and seek legal advice if required.

 

Cut off for new entrants:

The CJRS will close to any new entrants on 30 June 2020. New entrants will be those who have not completed the minimum furlough period of three weeks by that date, meaning the last date any new entrant could be placed on furlough to avail of the Scheme was on 10 June 2020.

 

What is flexible furlough?

Flexible furlough enables employers to bring back employees who have been furloughed on or before 10 June 2020, on a flexible basis, for any amount of time, whilst being able to claim a CJRS grant from HMRC for any normal hours that they have not worked. Employees can be rotated on or off furlough on a daily or weekly basis.

Employers will need to agree with their staff as to their working hours or daily shift patterns in writing and retain this until 2026 along with all other records relating to the furlough claim and how they have calculated their payments. Employer will need to record the actual hours worked and the remaining furloughed hours for each claim period. A record of this new agreement should be kept in writing. Due to varying working hours, and forthcoming changes to the Government’s level of contribution towards furlough pay, employers may wish to avail of HMRCs Coronavirus Job Retention Scheme calculator (found on the gov.uk website) which has been updated to calculate flexible furlough pay.

 

What are the benefits of flexible furloughing?

In recent months’ many employers have found themselves in a difficult position as engaging full time employees on a part time basis in the form of short time working results in employees receiving less pay than they would if they were furloughed and not providing any work. However, from 1 July 2020 employers have the flexibility to bring back those previously furloughed employees on a part-time basis. As lockdown restrictions are lifted, employers may find they have less demand for their goods or services than they did prior to lockdown or perhaps they are unsure as to what the demand will be once they have re-opened. The ability to flexibly furlough employees will enable employers to determine levels of staffing required for their business in response to any fluctuations in demand.

Flexible furloughing also has its advantages for employees too. Employees can be phased back into work on a gradual basis. This allows employees the time to readjust to work after lockdown and also enables them to assess their employer’s health and safety measures. Further, employees will receive an increase in pay, as any hours worked are payable at the employee’s normal rate of pay with 80% of hours not worked being covered by furlough pay.

 

Employer contributions from 1 August to 31 October 2020

From 1 August 2020 the following tapering system, requiring employers to contribute to furloughed salaries, will commence as outlined below:

August: The government will continue to pay 80% of wages up to a cap of £2,500. Employers will pay Employer National Insurance Contributions and pension contributions.

September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay Employer National Insurance Contributions and pension contributions and 10% of wages to make up 80%, up to the cap of £2,500.

October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay Employer National Insurance Contributions and pension contributions and 20% of wages

Despite the assistance from the CJRS we have been providing advice and assistance to many employers who still need to consider reduce their employee headcount through other measures, such as redundancy. We can assist employers with navigating through the CJRS or any other measures affecting their workforce.

Should you require advice or assistance in relation to any of the above please do get in touch with Jan Cunningham or David Mitchell in our Employment Team.

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