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/ 21 Jan 2021

UK Furlough Scheme – An Update

The state of perpetual uncertainty which pervaded 2020 shows no signs of abating in the early months of 2021. As the UK continues to deal with the challenges of the coronavirus pandemic, the Coronavirus Job Retention Scheme (Furlough Scheme) has acted as a vital relief for employers and employees alike. As the Furlough Scheme’s rules have generally been informed by the state of the virus and economy at the given time, they have been subject to constant changes. To the mild irritation of employment law and HR practitioners alike, the changes to the rules, and whatever government scheme is likely to succeed them (whether it will be the Job Support Scheme, the Job Retention Bonus, or something entirely different) remains uncertain.

Please see below the present state of the Furlough Scheme as at the date of publication:

  • The Furlough Scheme is currently extended until 30 April 2021. However, as mentioned above, it is entirely possible that it may be further extended. The Confederation of British Industry (CBI) have recently urged the government to extend the Furlough Scheme in advance of the 2021 Budget.
  • The current rules provide employers with the ability to claim 80% of an employee’s salary for hours not worked, up to £2,500 a month. Employers will still have to pay employers’ National Insurance and pension contributions.
  • Employers can claim under the Furlough Scheme regardless of whether they have used the scheme before. There is no limit on the number of employees who can be furloughed. Employers can claim for employees who were employed on 30 October 2020, provided that they made a PAYE submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. Employees who were on the payroll on 23 September 2020, who have since been made redundant, can be re-employed and put onto the furlough scheme.
  • The Furlough Scheme may be used if employees are unable to work due to caring responsibilities resulting from coronavirus. This includes childcare responsibilities, which have greatly increased for parents as a consequence of the closure of schools and childcare facilities. Nevertheless, it is important to note that employers are under no legal obligation to furlough their employees.
  • Employees may continue to benefit from ‘Flexible Furlough’, which permits employees to work part time and receive furlough pay for their unworked hours.
  • Employees still have the same rights at work, including, but not limited to, Statutory Sick Pay (SSP), annual leave, maternity and other parental rights, rights against unfair dismissal and redundancy payments. Please note that grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.
  • HMRC revised guidance confirms that a list of employer names will be published on GOV.UK on 26 January 2021 alongside an indication of their claim’s value. Going forward, from February 2021, HMRC will publish employer names, an indication of the value of their claims and the company number (for companies and LLPs) on a monthly basis. Employers wishing to avoid being named on 26 January 2021 must submit their applications to HMRC as soon as possible.
  • The Job Support Scheme, which the government had initially intended to replace the Furlough Scheme, is postponed until further notice.
  • The Job Retention Bonus, which the government had initially intended to deploy as an incentive for employers to retain staff, will not be paid in February 2021. An incentive scheme will be deployed, rather ambiguously, at ‘the appropriate time’.

Agreement To Furlough Employees

Employers should discuss furlough with their employees in advance of any decisions made. Any variation to the employee’s contract of employment should be made in writing. When making decisions in relation to furlough, including who to offer furlough to, equality and discrimination legislation will apply as usual.

To be eligible for the Furlough Scheme, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. The employer must retain a written record of the agreement for five years, and retain a record of how many hours the employee has worked and the number of hours they are not working.

What Are Employees Permitted To Do When They Are On Furlough?

When an employee is on furlough, an employer cannot ask them to do any work that pertains to earning money or providing services for the employer, or an associated Company/organisation. The employee is allowed to participate in training and may be permitted to work for a separate employer, provided that this is permitted in the employee’s contract of employment.

If you believe that your employer has been making fraudulent Furlough Scheme claims, you can make a report to HMRC here.

Should you require employment advice tailored to your circumstances, please do not hesitate to contact Hanne & Co’s Employment Law Team on 020 7228 0017 or James Collier at james.collier@hanne.co.uk.

And if you have been told that your firm is unable to retain you, we are able to provide accredited mediation services between you and your employer.

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