10 Jun Flexible furlough – from 1 July 2020
The scheme has now been extended until the end of October 2020, with key changes announced as follows:
- From 1 July, employers will be able to bring employees back to work on a part-time, flexible basis, while still receiving furlough pay from the government for the hours which the furloughed employees would have usually worked. Importantly, employers must note that only hours not worked (that would have usually been worked) can be claimed for under the scheme.
- Employers will be required to start contributing to the payments covered under the scheme: from August employers must pay employer’s national insurance and pension contributions; from September they will also have to pay 10% of furlough pay (meaning the government will be covering 70% of furlough wages up to £2,187.50 per month); and from October they will have to pay 20% of furlough pay (meaning the government will be covering 60% of furlough wages up to £1,875 per month). In this context, “furlough pay” is only for hours which are not worked by the employees – hours which are worked must be paid for by the employer in the usual way.
- Importantly, employers will only be able to claim under the scheme in respect of employees who have been placed on furlough leave by no later than 10 June 2020. In addition, the number of employees an employer can claim for in any claim period under the amended scheme cannot exceed the maximum number of employees they have claimed for under any previous claim (presumably to prevent abuse of the system).
- Employers will have until 31 July to make any final claims under the “old” scheme (i.e. for claims in respect of the claim period up to 30 June 2020). From 1 July, the new “flexible furlough” scheme will be open. From this date, claim periods will no longer be able to “overlap” months (given the differing levels of support available for each month).
- Employers should also remember that any variations to working hours still constitute a contractual variation to employees’ terms in the usual way – therefore agreement from employees must be sought (employers need to remember that they shouldn’t just focus on the CJRS application process, ultimately the employees need to consent to reduced pay/varied hours, or there could be disputes later down the line).
- Detailed guidance about the amended scheme is expected to be published on 12 June 2020.
Post-furlough planning and alternative workforce measures
In all of the below cases consultation with employees will be key. Given the context, staff are more likely to be open to creative proposals which might present an alternative solution to job cuts. . Things to consider are:
- Re-training, role changes and secondments – The Covid-19 situation may have highlighted areas where your business could expand and grow, as well as areas which may need to contract. Consideration should therefore be given to whether staff could re-train or up-skill into business critical roles, or new roles to service customers’ new demands.
- Salary reductions (starting at the top) and other changes to terms of employment – Given the context, employees will be more likely to accept salary reductions and other changes to their terms of employment to seek to avoid the possibility of losing their job completely. However, in line with the “we are all in this together” message, salary reductions should, in many cases, start at a higher level. Similarly, wage deferrals could be considered – although it will be difficult for employers to determine a time period after which the deferred wage can be paid, given the uncertainty of the situation and likely continued impact. Other changes to terms of employment, such as reductions in working hours, shorter working weeks and changes to shift patterns (in conjunction with the flexible-furlough scheme) may be required in order to adapt to differing demands. With all of the above, seeking employee agreement is key and specialist HR professional advice.
- Continued temporary measures such as unpaid or part-paid leave (or extended “furlough”) – While this is not a long-term solution, if you think that business is likely to pick up within a few months, you might seek to extend any leave period for some employees, even if the coronavirus job retention scheme is no longer open for financial support. To do this, you could seek agree to pay employees a percentage of their wage and/or ask them to take holidays to cover as much of the period as possible. There may be some employees willing to take extended unpaid.
- Redundancies – Ultimately, and after consideration of all feasible alternatives, it may simply not be possible to avoid redundancies. If this is the case, the key will be to follow correct legal processes and engage meaningfully with employees, to minimise the risk of claims and the additional cost this would represent. Care should be taken over selection criteria for redundancies – while this is unchartered territory, simply selecting those who have been on a period of furlough leave as “at risk” is likely to create employee relations issues and result in claims for unfair dismissal.
If you would like any further information on the above please contact us.