The Government have announced further details of the new flexible furlough scheme due to start on the 1st July 2020.
From 1st July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked. Employers will have to pay their employees for the hours they actually work.
Under the flexible scheme, employees can work for some of the week and be furloughed for the rest, in proportions decided between employee and employer. This will undoubtedly mean a change to the existing furlough agreements that many employers have in place with their employees, which will confirm that they are unable to carry out any work on behalf of their employer.
Any employers wishing to take advantage of these changes, should agree this with their employee’s and put in place an updated agreement to reflect any agreement reached.
The current minimum three-week period for furlough has been removed from the 1st July. There is no minimum period, although any claim through the CJRS portal must be in respect of a minimum one-week period.
To calculate the normal working hours for those with fixed hours or pay, you simply take the number of hours worked in the pay period before 19 March 2020. To calculate the normal working hours for those with variable pay, you take the higher of (a) the average number of hours worked in the tax year 2019 to 2020 or (b) the corresponding calendar period in the tax year 2019 to 2020.
For June and July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough.
For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.
In August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
For September, this will be reduced to 70% up to a cap of £2,187.50 and from October this will reduce to 60% of wages up to a cap of £1,875, again with employers paying ER NICs and pension contributions for the hours the employee is on furlough.
Employers can continue to choose to top up their employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish.
Wage caps are proportional to the hours not worked.
With these changes to the scheme, many businesses now face the prospect of making redundancies. Employers do however need to bear in mind that redundancy is only a potentially fair reason for dismissal, and they should therefore seek specific legal advice in relation to their situation and how to manage the process fairly and properly to avoid the risk of any claims for unfair dismissal.
For further advice or guidance on any aspect of the changes to the furlough scheme or for any advice on how to manage a redundancy process, please contact us at support@guardianlaw.co.uk
