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Coronavirus Job Retention Scheme update – Furloughing into the New Year

November 13, 2020

The Coronavirus Job Retention Scheme, which creates the ability for employers to furlough their employees, has been extended to the end of March 2021.  Features of the extended Scheme include:

A return to the original 80% contribution – for now

Previously, the Government’s funding of 80% of the furlough time, subject to a £2,500 monthly cap per employee, had reduced to 70% and then 60% as the Scheme headed towards its original end date of 31 October.

The extended Scheme reverts to an 80% Government contribution, subject to the £2,500 monthly cap, at least for the period up to January 2021.  The percentage contribution may change for next February and March, potentially looking more like the tapered contribution available in September and October, but we will need to wait and see.

No previous claim required

Employers can still make a claim under the extended Scheme, even if they didn’t make any claims in the original Scheme.  The same rules apply in terms of providing written confirmation to the employee of furloughing, which must be kept for 5 years, together with records of hours worked and hours furloughed, the amount claimed, HMRC reference number etc, which must be kept for 6 years.  As before, employers need to make sure they don’t fall foul of employment law requirements too, so changes to hours and pay via the Scheme must be done with the agreement of the employee and selection for furlough must not be done on discriminatory grounds or in an unreasonable or heavy-handed way which could give rise to discrimination and constructive dismissal claims respectively.

Flexibility remains

It remains possible to use the furlough Scheme flexibly.  This means that employers can use the Scheme to allow employees to work for part of their weekly hours, and be furloughed for the others, whilst they navigate the balance between staff costs and the needs of the business.  An employer who uses the Scheme for the first time after 1 November can introduce a flexible furlough arrangement straight away; there is no need for this to follow on the back of a complete furloughing in relation to all hours.

Closer analysis of misuse

HMRC is going to publish the names of companies and partnerships making claims under the Scheme from December onwards.  It is thought that this is to deter companies from claiming when they have no real commercial need.  It may also make it easier to identify any companies claiming fraudulently, by alerting employees to a claim by their employer when perhaps all employees are still being required to work all hours as usual.

We still have no other details of any analysis which might be carried out by HMRC in the future, so it remains as important as ever for employers to make sure that all their furlough paperwork is in place to evidence their compliance with the terms of the Scheme.

Claims for employees working their notice period – subject to change

Currently, if redundancy becomes necessary for a furloughed employee, an employer can continue to claim under the Scheme for the employee’s notice period, provided they top this up to 100% of their normal wage, with the employer continuing to fund the redundancy payment in full.  The updated Government guidance says this is under review and the approach will be changed for claim periods starting on or after 1 December 2020.  We will have to wait for the details, but it may well be that the Scheme won’t be available for notice periods from that point onwards.

Further details of the extended Scheme can be found in the updated Government guidance on the Gov.Uk website.  If you need specific advice on employment law issues within your workplace, either related to the furlough scheme or more generally, please get in touch and we will do our best to help.

This article must not be construed as legal advice. All cases are different on their facts and you should consult with us directly on your case.

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