Everything you need to know about furlough – FAQS

16th November 2020

Updated on 4 March 2021 with the latest guidance

The Chancellor, Rishi Sunak, has announced that the Coronavirus Job Retention Scheme, also known as furlough, will remain open until April 2021.

Key Latest Developments:

The government will pay up to 80% of wages subject to a cap of £2,500 until 30 September 2021.
Employers will pay NI pension contributions.
Employers can claim even if they, or the relevant employees, had not previously used the Scheme.
The Government will pay 80% until June, and then the contributions from the Government will reduce:
In July the Government will contribute 70% and employers will pay 10% and tax and NI
In August the Government will contribute 60% and employers will pay 20% and tax and NI
In September the Government will contribute 60% and employers will pay 20% and tax and NI
Employers can top this up but there is no obligation to do so.
Flexible furlough will continue to be an option.

For periods ending on or before 30 April 2021:

Employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE submission to HMRC between 20 March 2020 and 30 October 2020.

For periods starting on or after 1 May 2021:

Employers can claim for employees who were employed on 2 March 2021, as long as they have made a PAYE submission to HMRC between 20 March 2020 and 2 March 2021.

You do not need to have previously claimed for an employee before 2 March 2021 to claim for periods starting on or after 1 May 2021.
Employers should note that HMRC intends to publish the companies who use the Scheme from December onwards, as well as a “reasonable indication of the amount claimed. The only exception to his will be where an employer can show that publication would expose their workforce to “serious risk of violence or intimidation”. It is unclear to whom this could apply.
There is no obligation to use furlough but it could be discriminatory to furlough only some employees and not others, depending on individual circumstances.

Key Documents and Guidance:

The following are our historical blogs on furlough which remain as relevant today, as they were when they were originally posted.

Had enough of furlough? These may also be helpful at the moment:

What are the main conditions for using the furlough scheme?

Conditions for employers:

The latest employer guidance states that employees can be furloughed if you “cannot maintain your workforce because your operations have been affected by coronavirus” or where employees are vulnerable or shielding and therefore cannot attend work due to this vulnerability.
They must have a UK bank account and UK PAYE scheme.
They don’t have to have used the scheme previously.
Those organisations that are partially public-funded may now be eligible for support where the business is disrupted due to the virus.

Notice on furlough:

After 1 December 2020, employees cannot serve their notice and be on furlough at the same time, both statutory and contractual. Read more here.

Furlough agreement:

You must agree on this in writing with anyone you plan to furlough. You should retain the agreement for 6 years. But what does the agreement need to include? – We have set this out in a blog
Furlough agreements must be in place before the start of the claim period. The deadline to retrospectively furlough employees has now passed.

Conditions for employees:

For periods ending on or before 30 April 2021:

Must be on the payroll by 30 October 2020 and RTI submitted to HMRC

For periods starting on or after 1 May 2021:

Must be on the payroll by 2 March 2021 and RTI submitted to HMRC

How will holidays be affected by furlough?

Employees can take holiday during lockdown and furlough, but this must be paid at 100% of their wages. See our blog on annual leave which we drafted in the last lockdown. It’s worth bearing in mind that employees can also carry over their entire statutory holiday for the next two years if they have been unable to take it due to Covid. Employers should encourage open and flexible conversations if they are requiring employees to take annual leave.

Tip – if you are bringing someone back, who has already been dismissed, just to furlough them, then they will accrue holidays during furlough and you will have to pay them for this either during furlough by topping this up to 100% or as a lump sum when they leave.

What about the Job Support Scheme, or Retention Scheme Bonus?

Both the Job Support Scheme and the Job Retention Bonus have been put on hold for now. Instead, the government says a retention incentive will be “deployed at the appropriate time” because the policy intention behind the Job Retention Bonus has fallen away.

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Why should you outsource your HR services to solicitors? Getting your HR services from a solicitor means, should a case ever proceed to tribunal everything we have ever discussed is protected by Legal privilege meaning all conversations are protected. Whereas if you were to use an HR consultant, all conversations and documentation regarding that employee would be disclosable in the tribunal.

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Disclaimer…

Please note this blog is for reference purposes only and is only accurate at the date it was published. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action. Please contact us if you have any questions on enquires@thrivelaw.co.uk