Frequently Asked Questions
Fully updated and accurate as of the 15th June 2020
Government Guidance on the Job Retention Scheme
Disclaimer: These FAQ's should not be relied upon as legal advice as the landscape is changing on a daily basis. The Treasury has now issues a Directive which has a legal basis. This trumps previous guidance issued by the Government and the FAQ's have been updated taking into account. We would recommend you check with us prior to making any decisions based on the content of this guide along as this is only intended to be a guide and not advice.
UPDATE: Flexible Furlough Scheme (FFS) 15 June 2020
Further details were announced on 12 June relating to the detail of how the Flexible Furlough Scheme (FFS) will work. There are some changes that were not previously made clear therefore please follow the below guide and disregard our previous advice in relation to the Flexible Furlough Scheme. Please also note, this guide is intended for general advice only and we would ask you to contact us for specific advice if you intend to rely on it.
Changes to the Existing Furlough Scheme
Changes were announced to the existing Furlough Scheme on 29 May 2020 by the Chancellor. These changes are summarised below:-
· 10 June 2020 will be the last day that employers can place “first time” new employees on furlough. This date has now passed. This means no new employees can be placed on any type of furlough including the Flexible Furlough Scheme. The only exception is if they are returning from a period of statutory maternity or paternity leave. These particular employees can be placed on furlough after 10 June.
· From 1 July, 'flexible furlough' is being introduced, meaning employees will be able to work part-time and be furloughed part-time. Businesses will decide how that will work (in terms of the time split).
From 1 August, employers will have to pay employee's national insurance contributions and pension contributions and can no longer reclaim them through the CJRS.
· From 1 September, the government will only reimburse 70% of salary (up to a maximum of £2,190). Employers are required to top-up to 80% (or more, depending on what the employer agreed with the employee).
· From 1 October, the government will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more).
· The furlough scheme will close on 31 October 2020.
· The self-employed grant is being extended, with applications opening in August for a second and final grant. There will be parity with the reducing furlough scheme, paying 70% (not 80%) of average earnings up to £6,75
What do I have to do now?
Update your existing Agreements with those employees already on Furlough Leave that you wish to take advantage of the new Flexible Furlough Scheme (FFS). We have provided a template document that you can use which should be sent to those employees. It is recommended that you have this signed and dated by the employee and returned to you for your records. This is because HMRC have announced that written records should be kept as evidence of the employee’s entitlement under the CJRS. These records should be kept for 6 years in the event of an HMRC audit.
Work out what shifts you will require the employee to work. This needs to be worked out in advance. You must also notify the employee in writing of the days/hours they are expected to work (every time). We also have a separate template letter which you can use. When it comes to making a claim for FFS, you should not claim until you are sure of the exact hours they will work during the claim period because otherwise you may have to pay some of the grant back to HMRC if you make a mistake. Therefore, if you are planning on operating a rota system we would advise you work this out on a monthly basis rather than weekly. We have provided more info below on this scenario.
Preferably, the arrangements should be made longer term i.e. require the employee to work the same 3 days of the week for the FFS period and not on a rota basis. However, the FFS arrangements can be changed more than once but changes have to be confirmed, in writing, each time.
Additionally, this means when you come to making the claim you will have to keep clear records and work out the calculations which are not the most straightforward so it may be easier to keep things simple and have employees work the same shift pattern throughout (if this is possible to minimise the risk of making mistakes).
When making the claim itself – you must make a claim for each employee in one week blocks as a minimum.
The employee does not need to provide a written response each time you are writing to them to confirm their shift.
What can I claim back if an employee is on the Flexible Furlough Scheme?
The payment will work out as follows:-
· On the days that they are not working – the usual rules will apply in that you can claim for the 80% of the employees wages but you do not have to pay the employee any more than this;
· On the days that the employee is working – you will have to pay the employee the full 100% and you will be unable to claim any of that back under the FFS therefore you will not get the 80% back on the days the employee is working for you and you will have to pay this in full.
What has changed from the previous Furlough Scheme?
· Employees can now do some work for you from 1 July 2020 when they are on the Flexible Furlough Scheme (FFS) if you follow the above steps
· The rules relating to payment will also change from 1 August 2020 in terms of employers having to make contributions towards payment (set out above)
· On the days the employee is not doing any work then they will be subject to the same rule as before which means on a furloughed day the employee should do no work for you. This means they should not provide services to you or do anything which will create revenue for the business. The same rules will apply to training and topping up to National Minimum Wage if the rate of pay falls below the NMW rate.
· There is no minimum 3-week period to make a claim – however please see the question below for more info
Is there a minimum period for employees to be on Flexible Furlough?
· The most significant change is that the minimum 3-week period of furlough has been removed (as of 1 July 2020).
· This means that, from 1 July, agreed FFS arrangements can last any amount of time. That said, where a previously furloughed employee (e.g. one that was furloughed back in, say, April and has since returned to work) starts a new furlough period before 1 July, that furlough period must be for a minimum of 3 consecutive weeks and that can end before or after 1 July. For example, a previously furloughed employee can start a new furlough period on 22 June which would need to continue for at least 3 consecutive weeks ending on or after 12 July 2020. It is only after this, that the employee can be flexibly furloughed for any period. You also need to note that although flexible furlough agreements can last any amount of time, the minimum claim you can make is for one week (unless you are claiming for the first few days or the last few days in a month- see point below)
How do you make a claim under FFS? Do you still use the same HMRC Portal?
· Some rules are changing in this respect but yes you still use the same HMRC portal
· After 1 July, claim periods must start and end within the same calendar month and must be at least 7 days unless you are claiming for the first few days or the last few days in a month.
· You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it.
· The crucial point is that you cannot make claims that cross calendar months.
· Claims for periods ending on or before 30 June 2020 must be made by 31 July 2020. The first time that you can make a claim for days in July is 1 July- you cannot claim for periods in July before this point.
Can I change employees shift patters on Flexible Furlough?
· Ultimately – yes you can however a lot of planning and record keeping will be the key tool here
· Once you have the employee’s written agreement to be placed on the FFS (we have an updated template) then you will need to notify the employee what shifts they are required to work. You can add this into the original template if you wish however we would recommend writing out separately to the employee setting out the shift pattern to keep things separate.
· If the shifts are likely to change i.e. if you operate on a rota system then you will require to write out to the employee in advance of each and every shift change (if the shift pattern differs week to week then you will have to write out to them every single week). A rota system is not sufficient – you will have to specify to the employee what days they are expected to work and set out the furloughed days. This is a requirement of the Scheme and will be needed when making your claim under the Portal (there are strict rules regarding the claim periods which have been explained above).
What about zero hour workers? How do they work under the new FFS if we want them back for some hours?
· They can take advantage of the FFS however the hours they work or are claimed for must not be more than the hours that you are claiming under the existing scheme, for example, if the employee has a variable average of working 20 hours per week then you cannot exceed this amount by having them work 20 hours or more as that would mean they are working the full hours and therefore should be removed from furlough completely.
· This will operate in the same way as the normal scheme in that the hours will be calculated in accordance with the following:-
o For those with variable hours/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. If employees are paid per task or piece of work done, you should work out the usual hours for these employees in the same way as for other employees who work variable hours, if possible.
Is there a limit on how many employees can be placed on the FFS?
· Yes. The number of employees you can claim for in any claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June 2020.
· For example, if you previously submitted 3 claims between 1 March and 30 June 2020, in which the total number of employees furloughed in each respective claim was 30, 20 and 50 employees, then the maximum number of employees that you can furlough in any single claim starting on or after 1 July would be 50.
· However, this may differ where you have an employee returning from statutory parental leave
Can I still have employees on the full furlough scheme if they cannot return to work i.e. if they are shielding?
· Yes, they can continue to remain on furlough until the end of the scheme which is set at 31 October 2020 (bearing in mind the employer has to contribute from August onwards)
How do holidays work on FFS?
· In the same way as they do with the standard furlough scheme, in that holidays continue to accrue
· Holidays can also still be used during the FFS on the days of being “furloughed” and they must be paid at the 100% rate
What happens when the Furlough and Flexible Furlough Scheme ends on 31 October?
· When the CJRS ends on 31 October, you must decide, depending on your circumstances, whether employees will return to their normal hours. If not, it may be necessary to consider reducing their hours or a termination of employment (redundancy).
· Of course, if you need to, you can make redundancies or changes to terms and conditions in advance of 31 October. The updated guidance clarifies that “normal redundancy rules apply to furloughed employees”.
Are there any penalties if I get this wrong?
· You need to be careful that the claims you make are correct.
· HMRC will check claims and payments may be withheld or need to be paid back if the claim is found to be (a) fraudulent or (b) based on incorrect information.
· The Finance Bill is due to be amended (w/c 15 June 2020) to enable HMRC to pursue employers who break the CJRS rules. It is reported that HMRC is expected to focus on those employers who have made employees work despite claiming the 80% furlough payments. HMRC is also expected to look out for employers that did not pass on the full furlough payment to staff or traded profitably and didn’t need the CJRS payments.
· If HMRC suspects that an employer has broken the CJRS rules, it can impose a 100% tax rate on the payments. This means that HMRC can prosecute employers which fail to pay tax demands.
· Once the Finance Bill becomes law next month, any employer that received money from the CJRS will have 30 days to self-declare a mistaken application and pay the money back without penalty.
· If HMRC suspect that an undeclared mistake has been made (after considering filed accounts for the last and current financial years), it will require those suspected to show they did not break the CJRS payment rules. A failure to pay back 100% could result in criminal prosecution.
The law is constantly changing and the position set out in this note may not be current. You should not rely on this note as a comprehensive statement of the law or HR practices. Please contact us if you require specific HR/legal advice on your situation.
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers.
In its current for, employers can use the HMRC portal which is now live to claim for 80% of furloughed employees' (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
It has been announced by the Chancellor on the 12th May 2020 that the Scheme will continue in its current form until the end of July 2020. Hs has confirmed that the Scheme will remain in place until October however there will be changes to the Scheme from July - October.
From July 2020 it is expected that the 80% rate of contribution may drop to 60% and that employers will have to share the cost with HMRC. Further details are to be announced by the end of May.
The Chancellor has also confirmed that, whilst at present, you cannot do any work whilst on furlough, he will look to vary this to allow part time working from July onwards.
- Eligible employees must have been on your payroll on the 19th March 2020.
- Employees must be furloughed for a minimum of three weeks
- Employees who are shielding in line with public health guidance (i.e. have been deemed very high risk and have received notification from the Govt that they fall into this category can be placed on furlough but those self-isolating will only be entitled to furlough once the period of self-isolation has completed.
- The grant will cover the lower of 80% of usual salary or £2,50 plus National Insurance and minimum automatic enrolment employer pension contributions the NI / pension contributions will be at the 80% rate;
- Employees can take annual leave during furlough but this must be paid at 100% rate;
- Employers can insist on employees taking annual leave during furlough as long as they give them notice which is double the length of the period of annual leave they are looking to take.
How do you set up an employee to be on furlough?
- You require the agreement of the employee as you are essentially varying their employment status.
- It has now been updated by the Government to confirm that this agreement must be in writing
- It was clarified on the 23rd April 2020 by HMRC that despite the wording in the Directive conflicting with the guidance given previously, that the employer does not need to have the employee's written consent to be furloughed however we would recommend that you do this in the event that HMRC does an audit on your business.
- This written notification should be kept on record for five years
- The employer should therefore write to the employee asking them to agree to be on furlough. We have a template letter which we recommend you use. This letter also allows for the employee to return to employment once the period of furlough has bended or if the employer required them back because work becomes available.
- You should ask the employee to sign this and return it however given the circumstances surrounding practical limitations because of lockdown then we suggest you ask the employee to respond to the email with the Agreement and to confirm, in writing, that they agree to all of its terms and date this or use a digital signature if possible.
- Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they are written to confirming their furloughed status .
·C Can you rotate employees on furlough?
- This has now been confirmed by the Government that yes you can. But only for up to 3 weeks at a time. For example, you can designate one employee to be furloughed for 3 weeks then designate another employee to be furloughed for a further 3 weeks and rotate them. However, each claim will need to be made separately in respect of each "block" of furlough leave (to a minimum of 3 weeks each time but a maximum of 3 months). You cannot have one employee work half the week and another employee with the half of the week.
Can the employee start a new job when on furlough from their existing job?
- Yes, this has been clarified by the Government that they can start a new job when on furlough (meaning they might end up earning 80% of the old salary and 100% of a new one), This was not prohibited in the earlier guidancem but the new guidance expressly allows it. THe guidance does not say it has to be allowed under the employment contract, but presumably the old employer can waive that.
- Check the employment contract to see if there is a clause which required employees to obtain consent from the employer to work for another company as the employer may be able to refuse consent in some circumstances.
- If your employee has more than one employer they can be furloughed for each job. Each job is seperate, and the cap applies to each employer individually.
Annual Leave whilst on Furlough
Do you accrue annual leave when on furlough?
Yes This has now been confirmed in separate guidance issued by the Government on taking annual leave during furlough.
- Recent amendments by the Government also extend the Working Times Regulations (Amendment 2020) to allow employees to carry over 20 days paid annual leave for a further 2 year period if it was not reasonably practicable for them to use it in the same holiday year. Please note, this only applied to the first 20 days on annual leave. The remaining 8 days under UK law cannot be carried over.
Can you be on annual leave and furlough at the same time?
My employee is refusing to take annual leave as she says she cannot enjoy it as proper rest time? Can I insist that she takes it?
What is we have employees starting after the 28th February are currently employed?
You can only claim for furloughed employees that were on your PAYE payroll on or before the 19th March 2020 and which were notified to HMRC on an RTI submission on or before the 19th March 2020. This means an RTI submission notifying payment is respect of that employee to HMRC must have been made on or before 19th March 2020. Employees that were employed as of the 28th February 2020 and on payroll (I.e. notified to HMRC on an RTI submission on or before 28th February 2020) and were made redundant or stopped working for the employer after that and prior to 19th March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough.
2 new employees are due to start soon and the work they were going to be doing is no longer available to them, what can we do?
What does the £2,500 maximum payment cover? What do we need to pay?
- The employer will receive a grant from HMRC to cover the lower of 80% of an employee's regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
- At a minimum, employers must pay their employee the lower of 80% of their regular wage of £2,500 per month. An employer can also choose to top up an employee's salary beyond this but is not obliged to under this scheme.
- It has been clarified by the Government that an employer can reclaim 80% of compulsory (presumable meaning contractual) commission back from HMRC as well as basic salary. This would likely apply to the sales sector such as car salesmen and estate agents but may also apply to hairdressers if they were earning commission which was part of their contractual entitlement to pay. This can only be referring to the commission from past sales or commission as the furloughed employees cannot be completing new sales or earning commission when on furlough.
- It does not however include non- monetary benefits such as the value of health insurance or a car.
- Employers can also reclaim 80% of fees from HMRC (although there is no clarification on what this actually means)
If someone is self - isolating or on sick leave
If your employee is on sick leave or self-isolating as a result of Coronavirus, they'll be able to get Statutory Sick Pay, subject to other eligibility conditions applying. The Coronavirus Job Retention Scheme is not intended for short - term absences from work due to sickness, and there is a 3 week minimum furlough period.
- Short term illness / self - isolation should not be a consideration in deciding whether to furlough an employee. If. however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees. In these cases, the employee should no longer receive sick pay and would be classified as a furloughed employee.
- Employers are also entitled to furlough employees who are being shielded or off on long-term sick leave. It is up to employers to decide whether to furlough these employees. You can claim back from both the Coronavirus Job Retention Scheme and the SSP rebate scheme for the same employee but not for the same period of time.
- When an employee is on furlough, you can only reclaim expenditure through the Coronavirus Job Retention Scheme, and not the SSP rebate scheme. If a non- furloughed employee becomes ill, needs to self-isolate or be shielded, then you might qualify for the SSP rebate scheme, enabling you to claim up to two weeks of SSP per employee.
If your employee becomes sick while furloughed
- Furloughed employee retain their statutory rights, including there right to Statutory Sick Pay. This means that furloughed employees who become ill must be paid at least Statutory Sick Pay. It is up to employers to decide whether to move there employees onto Statutory Sick Pay or to keep them on furlough, at their furloughed rate.
- If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although may qualify for a rebate for up to 2 weeks of SSP. If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to clam for these costs through the furlough scheme.
Can an employer carry out redundancy whilst on furloughed?
- Yes, however extra care should be taken if there is the option to furlough the employee and the downturn in work is directly related to COVID-19. Consider whether, after this period (the next 12 weeks) if the work is likely to pick up again before making the decision to begin the redundancy process. We would recommend you take specific advice on this due to the high risk nature of any potential claims being brought against you.
What about an employee who was made redundant before the 28th February or after?
- They can be re-engaged and can be designated as furloughed however this is at the employer's discretion.
- We would advise that the employer exercises caution and take each employee on a case by case basis as re-hiring employees will then give the same employment rights they had previously and may cause difficulties in future when work becomes available again.
Can redundancy notice run alongside furlough leave?
What if the business has been TUPE'd over and the employees of the newly TUPE'd company were not on the payroll as at the 28th February?
- There was a previous loophole which meant that they would not be covered under the scheme however HMRC have now confirmed that they can be put on furlough (confirmed the 9th April 2020)
- "A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after the 28th February 2020 if with the TUPE or PAYE business succession rules apply to the change in ownership"
What if my employee has went back home and lives out side the UK?
How would furlough leave apply to agency workers and fixed term?
- Furloughed employees must have been on your PAYE payroll on the 28th February 2020, and can be on any type of contract, including:
- Full - time employees
- Part - time employees
- Employees on agency contracts
- Employees on flexible or zero - hour contracts
- Foreign nationals are also eligible to be furloughed provided they meet the above criteria
- This scheme is only for employees on agency contracts who are note working
- Those on fixed - term contracts would not normally be entitled to furlough if the end date of the contract is during this period however you can agree to extend this date with the employee should you wish. There is no guarantee you would be able to reclaim from HMRC in this event however so tread very carefully and seek specific advice if you have employees who fall into this category.
How do you work out how to pay employees whose hours vary?
- If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher or either:
- The same month's earning from the previous year (i.e. March 2019)
- Average monthly earnings from the 2019 - 2020 tax year
- If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
- If the employee only started in February 2020, use a pro-rata for their earnings so far to claim
- once you've worked out how much of an employee's salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.
Returning from statutory leave - how is pay for furlough calculated if returning from statutory leave such as maternity leave
- Statutory leave includes maternity leave, paternity leave, shared parental leave, adoption leave, sick leave
- In line with other employees, claims for full or part time employees returning from statutory leave after the 19th March 2020 should be calculated against their salary, before tax, not the pay they received whilst on statutory leave
- Claims for those on variable pay, returning from statutory leave should be calculated using either the:
- Same month's earning from the previous year
- Average monthly earnings for the 2019 - 2020 tax year
Can an employee on maternity leave come back early and get furloughed?
- This has now been updated by guidance on the 1st May 2020 which states that if an employee gets Maternity Allowance whilst they are on maternity leave then they should not get furlough pay at the same time.
- If they gave agreed to furlough, they should contact the Job Centre as soon as possible to stop their MA payments.
- If they agree to be put on furlough and end their maternity leave early, they will need to give you at least 8 weeks' notice and they will not be eligible for furlough pay until the end of the 8 weeks.
Can an employee do work on furlough?
- At present no, the employee should not be doing any work but they can do some training as long as it does not generate any business for the company. If they are training then they should also be paid at NMW rates for the period that are doing the training (this means if furloughed and the 80% drops below NMW then it will need to be topped up to meet NMW for the specific period of training). We recommend you seek specialist advice on this point.
- An employer can still keep in touch with the employee on a regular basis but they should not be carrying our any work - related activities i.e. one to ones and performance reviews should not be carried out during this period.
- Any employer in breach of this may by subjected to criminal prosecution for fraud under the scheme and HMRC have set up a hotline for employees who are in this situation and they can call to report the employer.
- HMRC have also stated that employees cannot work for organisations that are linked to the employer., as well as not working for the employer, when on furlough or even volunteer for the employer doing the same role on a voluntary basis.
- A furloughed employee can take park in volunteer work, if it does not provide services to or generate revenue for, or on behalf of your organisation or a linked or associated organisation. Your organisation can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance but they are not obliged to do so.
- It is expected that in or around July 2020, the rules on the scheme will change and that employees will be able to work part time whilst on furlough. However we are awaiting further details which should be expected by the end of May.
What is Emergency Volunteer Leave ("EVL")?
- An employee can sign up to EVL but they must get a certificate to do so and they can only do it if the business employs more than 10 staff.
- There is other criteria set out in legislation and we would recommend you seek advice on this if you are in this situation
- EVL is a form of unpaid leave and all other employment rights apply during a period of EVL.
What about apprentices?
- The Government have provided guidance specifically for apprentices here:
Can I be furloughed to look after my children?
- Under normal circumstances, if an employee requests time off to look after children then this can be dealt with under dependents leave which is unpaid.
- However, the government have now issued updated advice to say that employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For, example, employees that need to look after children can be furloughed.
- This should be given careful consideration if the employee is still required to work I.e. in a care home as there is a concern that furloughing everyone who fall into these categories may then not leave enough staff available to cover work particularly as some may end up having to self-isolate if they develop symptoms.
- Remember, just because the guidance says that it can take place, this does not mean that it necessarily should an you will need to consider each case on a case by case basis.
How do I bring someone back off furlough leave?
My employee does not wish to return to work. What can I do?
- This will need to be considered on an individual case by case basis.
- New government guidance has been released which gives advice and information to businesses over 8 different sectors setting out how to make the workplace "Covid safe"
- BEIS have also published guidance on making the workplace safe in light of Covid 19
- If the employee does not feel it is safe for them to return to work then have a proper conversation with them to find out why they feel this way.
- Make sure that you have carried out all necessary risk assessments prior to re-opening the business, we would recommend seeking additional health and safety risk assessments if you work in a higher risk sector; ensure that practices including social distancing and hand sanitising stations can be implemented in the workplace safetly
- If you can demonstrate that the workplace is safe to return, try and alleviate the employee's concerns by discussing flexible working arrangements with them and taking account of their personal circumstances.
- If the employee is concerned about their own health and they have underlying health conditions, then please seek specialist advice from us in order to minimise the risk of a discrimination claim.