This is an update to our previous Ultimate Furlough FAQs articles. This is an ever-changing landscape and if the position changes further we will issue a further update.

• The Coronavirus Job Retention Scheme (Furlough) has been extended until 30 September 2021
• SMEs across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee (provided that this is a coronavirus temporary support measure)
• From 1 April 2021, those categorised as extremely clinically vulnerable are no longer advised to shield and will no longer be eligible for Statutory Sick Pay (SSP) or Employment & Support Allowance (ESA) as a result of being advised to shield.

This is an update to our previous Ultimate Furlough FAQs articles. This is an ever-changing landscape and if the position changes further we will issue a further update.

The employment guidance for business portal

In addition to the Q&A’s, we are pleased to announce that we have an easily-accessible Ashtons Legal Online HR Portal for businesses, which contains over 95 HR documents, templates and draft letters, covering over 14 topics such as contracts and offer letters, disciplinary issues, flexible working, performance management, family leave, sickness absence, recruitment, termination of employment and redundancy. The portal also contains a Furlough  Agreement and a Job Support Scheme Open Agreement.

All of these materials are regularly updated to comply with new developments such as the COVID-19 crisis and the Good Work Plan, which came into effect on 6 April 2020.

If you would like unlimited one-year access to this portal, we are charging £325 plus VAT.

Please get in touch by emailing employment law solicitor, Claire Sleep at claire.sleep@ashtonslegal.co.uk.

Your questions answered

The legal infrastructure around furlough is changing on a daily basis. The content of these answers have been sourced from the government’s update on 3 March 2021 and may continue to change. Please contact a member of our team for bespoke legal advice.

Furlough

1. What is furlough leave?

Furlough leave is a type of paid leave which the government announced on 20 March 2020 to help businesses retain their staff during the coronavirus crisis. It is a scheme where the business can opt to send their staff home and whilst they are not working, claim up to 80% of wages (up to a maximum of £2,500 per month) from the government’s Coronavirus Job Retention Scheme (“Scheme”) using an HMRC portal. Employers can top up to 100% or agree with staff to accept the lesser rate. They must pass on the wages recovered to their staff.

31 October 2020 – 31 March 2021

The extended furlough scheme will revert to how things were in August when the government contribution was 80% of wages up to a cap of £2,500 and employers just paid employer NICs and pension contributions. Employers will have to pay the employee’s wages for the hours they do work, as well as employer National Insurance and employer pension contributions. The government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.

1 April 2021 – 30 April 2021

The scheme will remain the same as described above for the period 31 October – 31 March.

1 May 2021 – 30 June 2021

The CJRS will remain in its current form until the end of June 2021, with employees receiving 80% of their current salary for hours not worked. Employers will not be required to make contributions beyond National Insurance contributions (NICs) and pension payments in April, May and June 2021.

1 July 2021 – 31 July 2021

Starting in July 2021, employers will be expected to contribute 10% towards the cost of unworked hours.

1 August 2021 – 30 September 2021

Employers contribution to hours not worked will increase to 20% in August and September 2021.

2. What is the purpose of the furlough scheme?

It was initially the case that the CJRS was put in place as an alternative to redundancy or lay off. It now appears clear that this is not entirely the case. The Treasury directions require that there is a connection between putting employees on furlough and the consequences of COVID-19, but not that there is necessarily a risk of redundancy.

The fifth Treasury Direction notes that the purpose of payments under CJRS is where they arise from health, social and economic emergency in the UK resulting from coronavirus and coronavirus disease (this is as has been stated previously). However, the 5th Treasury Direction adds that the purpose should be: “arising from the emergency resulting from the resurgence of the incidence of coronavirus and coronavirus disease and the measures taken to reduce further transmission, loss of life, demands upon healthcare resources and damage to economic activity in the UK.”.

There is therefore an element of discretion in whether employers use the scheme and employers will need to continue to demonstrate that their operations have been “severely affected” by COVID-19 and must not abuse CJRS.

There is no change to the purpose of furlough under the sixth Treasury Direction.

3. What is the flexible furlough scheme?

For details about the flexible furlough scheme, click here.

Flexi-furlough will continue to be an option, so employees can work part-time and receive a furlough grant for unworked hours.

4. How do I furlough someone?

Employers should seek the agreement of their staff to make the temporary variation of the contract required to place someone on furlough. To be eligible for the grant employers must confirm in writing to their staff members that they have been furloughed and keep a record of this furlough agreement for at least five years.

When employers are deciding who to offer furlough to, or other actions as part of the furlough process, employment, equality and discrimination laws apply in the usual way.

If an employer is looking to utilise the flexible furlough scheme they will also need to keep a record of:

• the usual hours the individual would work during any claim period;
• the hours the individual will work/has worked in that claim period
• the hours the individual was furloughed for in that claim period.

These records must be kept for at least five years.

With flexible furlough, it is possible to vary the hours someone is required to work as you wish (with their agreement) but all changes must be clearly documented. For example, they could work 50% of hours for two weeks, and then 100% for one week (for example to cover someone’s holiday) and then back to 50%.

5. Which employers can claim under the furlough extension?

All employers with a UK bank account and UK PAYE schemes can claim, whether their businesses are open or closed. Employers do not need to have used the furlough scheme previously (claimed for an employee before 30 October) to claim for periods from 1 November 2020.

6. What is the minimum furlough and claim period?

There is no minimum number of weeks or days that an employee must be on furlough.

However, any claim through the portal will need to cover a period of at least one week unless you are claiming for the first few days or last few days in a month. (You can only claim for a period of fewer than seven days if the claim period includes either the first or last day of the calendar month, and you have already claimed for the same employee for the period immediately before it.)

Claim periods must start and end within the same calendar month.

7. I am an employer in the public sector – can I furlough staff?

The government expects most public sector organisations to not require furlough for staff as they continue to provide essential public services. Where employers receive public funding for staff costs and that funding continues, they should use that money to pay staff in the normal fashion and not furlough them. All other previous CJRS eligibility requirements also apply to these employers.

Partially publicly funded organisations may be eligible where their private revenues have been disrupted and should contact their sponsor department or respective administration for further guidance.

8. Who is entitled to furlough?

For periods ending on or before 30 April 2021, you can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before 30 October 2020 to claim for periods from 1 November 2020.

For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before 2 March 2021 to claim for periods from starting on or after 1 May 2021.

As under the previous Furlough scheme rules:

For the purposes of this note “employee” covers full-time employees, part-time employees, employees on agency contracts, employees on fixed-term contracts and employees on flexible or zero-hour contracts.

Apprentices can be furloughed but must be paid at least the Apprenticeship Minimum Wage, National Minimum Wage or National Living Wage (as applicable) and so the employer must make up any shortfall.

Foreign nationals are also eligible to be furloughed. Grants under the scheme are not counted as ‘access to public funds’, and you can furlough employees on all categories of visa.

Employers can also furlough individuals who are unable to work because they are shielding in line with public health guidance or they have caring responsibilities resulting from COVID-19 including employees that need to look after children. An employer does not need to be facing a wider reduction in demand or be closed to be eligible to claim for shielding employees (but note that it is not expressly stated by the Government guidance as to whether this is also the case for those with caring responsibilities).

9. My employee is on a fixed-term contract which is due to expire shortly. Can we renew their contract and put them on furlough leave? What if the contract has already expired?

For claim periods ending on or before 31 October 2020, you’ll be able to claim for employees on fixed-term contracts and the normal eligibility rules apply, (see question 7 for details).

For claim periods after 1 November 2020, employees on fixed-term contracts can be extended or renewed. You can put the employee on furlough as long as they were employed by you on or before 30 October 2020. You must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

If the employee’s fixed-term contract expired after 23 September, they can be re-employed and claimed for as long as the other relevant eligibility criteria are met.

Employers should be aware that fixed-term contracts become permanent after four years’ service has been completed. Employers should be mindful of this when deciding to extend a fixed-term contract as if the successive contract takes the employee to four years, they may find themselves with a permanent employee they didn’t expect.

10. Can my employee be furloughed from more than one job?

If your employee has more than one employer they can be furloughed for each job. Each job is separate, and for claims for periods on or before 31 October 2020 – the cap applies to each employer individually. Employees can be furloughed in one job and receive a furloughed payment but continue working for another employer and receive their normal wages.

11. What if someone is working their notice period right now, can I furlough them?

For claim periods starting on or after 1 December 2020, employers cannot claim for employees who are serving contractual or statutory notice (this includes people serving notice of retirement or resignation).

12. Is it possible to rehire and then furlough workers recently made redundant under the new extension?

Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees. As above, this under review and is set to change from 1 December 2020.

13. I want to put my employees back on furlough, do the previous calculations for calculating reference pay and usual hours under the old furlough scheme still apply?

Employees who have previously been furloughed continue to have their reference pay and hours based on the existing furlough calculations (as under the old scheme).

14. What is the pay calculation for employees who have not been previously furloughed?

If an employee has not been put on furlough before, 80% of wages must be calculated for employees:

• on a fixed salary – 80% of the wages payable in the last pay period ending on or before 30 October 2020
• whose pay varies – 80% of the average payable between (these dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins.

15. What can individuals do whilst furloughed?

Up until 30 June 2020, individuals on furlough could not perform any work for the organisation that has furloughed them. They could, however, complete training or voluntary work for the organisation, so long as it did not provide services or generate revenue for the organisation. At any stage during the scheme, individuals can continue to work other jobs (as each organisation has its own responsibility to furlough if necessary) and can volunteer for other organisations.

If contractually allowed by the furloughing employer, the individual can take on another job during the furlough period. If you are taking on new staff that has been furloughed from elsewhere they should complete Statement C of the new starter checklist.

From 1 July 2020 onwards, individuals on furlough are able to work for the company that furloughed them during their non-furloughed hours. For example, if a full-time employee has a contract that states they will complete 40 hours per week but the employer is only able to offer 16 hours per week of work, they will be on furlough leave for the outstanding 24 hours. During those 24 hours, the employee cannot be expected to attend work.

The only time the employee can work is during their official working hours (in this case, 16 hours per week).

The rules from 1 July apply under the new furlough extension.

16. What is the 80% (or £2,500 cap) comprised of?

The government has confirmed that you can claim for any regular payments you are obliged to pay your employees.

Discretionary bonuses (including tips), discretionary commissions, non-cash payments, and non-monetary benefits should not be included, however, the compulsory commission can be reclaimed from HMRC as well as basic salary, overtime, and fees. The amount of compulsory commission paid should be backdated to past sales as furloughed employees cannot be completing new sales when on furlough. Benefits provided through salary sacrifice schemes should not be included in the reference salary.

Employees are only entitled to National Minimum or Living Wage if they are working. If the 80% will drop them below that threshold you can pay the lower rate if they are not working. However, if they are required to complete any training (including online training) during this period they will have to be paid NMW / NLW even if that includes the employer topping up. The current rates and rates applicable from 6 April 2020 are here.

For the calculation, employers will need to identify the reference period that they will use to work out an employee’s usual wages.

Fixed-rate employees:

The reference period is the last pay period ending on or before 19 March 2020 for employees who either:

• were on payroll on 19 March 2020, that is a payment of earnings made to them in the tax year 2019 to 2020 which was reported to HMRC on a Real-Time Information (RTI) Full Payment Submission (FPS) on or before 19 March 2020
• a valid CJRS claim was made for the employee in a claim period ending any time on or before 31 October 2020.

For all other employees, the reference period is the last pay period ending on or before 30 October 2020; this will only apply for periods starting after 1 November 2020.

Employees whose pay or hours vary:

For employees’ who were on your payroll on 19 March 2020, that is a payment of earnings was made to them in the tax year 2019 to 2020 which was reported to HMRC on a Real-Time Information (RTI) Full Payment Submission (FPS) on or before 19 March 2020, employers should calculate 80% of the higher of:

• the wages earned in the corresponding calendar period in the tax year 2019 to 2020
• the average wages payable in the tax year 2019 to 2020.

For all other employees’ you should calculate 80% of the average wages payable between 6 April 2020 (or, the date the employment started, if later) and the day before they are furloughed on or after 1 November 2020.

17. What about deductions?

The employee will still pay income tax, National Insurance and (if applicable) pension contributions on the reduced salary.

Apprenticeship Levy and Student Loans should continue to be paid as usual.

18. We operate an annual pay increase, will the uplift be included in claims for previously furloughed staff?

Fixed-rate employees

The furlough salary is based on the pay period on or before 19 March 2020 so where employees have been furloughed before, any pay increase awarded since 19 March will not be included in any claims as these fall outside of the calculation period.

Where employees have not been furloughed before, the furlough salary is based on the pay period before 30 October so for these people, the claim might include the pay rise.

Employees whose hours or pay vary

If employees were on the payroll on 19 Match 2020 and/or have been furloughed before, the calculation would be based on figures from the 2019/2020 tax years so the pay rise would not be a factor.

If employees joined the Payroll after 19 March 2020, the calculation is likely to include the pay rise as it will be an average of the wages paid.

19. When will my business be reimbursed for the wages paid during furlough?

You should pay wages as usual and then reclaim them via the HMRC portal (unless you have the contractual agreement with staff not to do so).

20. Can I reclaim for wages if I have asked staff to take a pay cut or work fewer hours, but carry on working?

No – if the staff are working they are not on furlough leave and therefore the employee cannot gain the benefits of the Scheme.

The employer can reclaim for wages only for the time the staff has spent not working.

21. Can I rotate staff on furlough, for example, one week normal working, one week furlough?

Employees had to have been furloughed for a minimum of three weeks until 30 June 2020 (although could be rotated on a three-week pattern). From 1 July you can rotate staff as you see fit but must be for a minimum claim period of seven calendar days.

22. What about staff who are on unpaid leave, maternity leave, sick leave, parental leave, etc?

Staff currently on long term sick leave and in receipt of sick pay can be furloughed. This is a reversal of the previous position and was announced by the government on 9 April 2020. The updated guidance confirms that short term illness and self-isolation should be dealt with by utilising SSP in the usual way, but for longer absences, they can be put on furlough, at the employer’s discretion..

If an employer does furlough an employee currently on sick leave, the employee is no longer eligible for statutory SSP. The amount which the employee is paid whilst on furlough, however, must be the same or greater than statutory sick pay (SSP). It is the employer’s decision whether to furlough staff on sick leave and is an option only.

If employees are shielding pursuant to public health guidance, or are living with someone who is shielding, they are able to be furloughed if they are unable to work from home and you would otherwise have to make them redundant.

Staff on unpaid leave since 1 March 2020 can be furloughed, once they return from their period of unpaid leave. If staff are unable to work due to caring responsibilities resulting from coronavirus (e.g. childcare facilities closing) they are eligible for furlough even if their job is not otherwise redundant.

For staff on maternity leave, adoption leave, shared parental leave or paternity leave the usual rules for statutory payments apply. If your staff return from these types of leave and you wish to furlough them, the updated government guidance confirms that their furlough pay should be “calculated against their salary, before tax, not the pay they received whilst on statutory leave.” It has now been made clear that such individuals returning from statutory leave can be furloughed even if they had not been furloughed for the three week period prior to the end of June.

23. My employee is on SSP while self-isolating, when does the pay start and can we reclaim SSP? Employees within the extremely clinically vulnerable category are no longer advised to shield from 1 April 2021 and will no longer be eligible for SSP or ESA as a result of being advised to shield.

You must pay your employee from the first ‘qualifying day’ they’re off work. A ‘qualifying day’ is a day an employee usually works. You can claim up to two weeks SSP subject to the following conditions being met:

• your employee was off work because they had coronavirus, was self-isolating or shielding
• your PAYE payroll scheme started on or before 28 February 2020
• you had fewer than 250 employees on 28 February 2020
• you can reclaim up to £95.85 a week for each employee
• you cannot reclaim SSP if your employee is off sick for any other reason.

24. Are employees who have been previously advised to shield still eligible for furlough after the guidance to stop shielding ends on 1 April?

The CJRS scheme has been extended until September 2021, employees who were shielding may continue to be eligible throughout this period. Please see the question on who is entitled to furlough for more details. It is up to employers to decide whether to furlough these employees.

25. Are employees who have been previously advised to shield still eligible for SSP after the guidance to stop shielding ends on 1 April 2021?

From 1 April 2021, employees will no longer be eligible for SSP or ESA on the basis of being advised to shield.

26. Individuals who have been shielding have been advised that from 1 April 2021, ‘everyone is advised to continue to work from home where possible, but if you cannot work from home you should now attend your workplace’. How should employers approach employees who are concerned and do not want to return to work?

If an employee in this situation is reluctant to return to work, the employer should act reasonably and have a conversation with the employee, to understand what their specific concerns are and to undertake a risk assessment, based on the facts of each case. Employers should explain the safety measures they have put in place throughout the workplace to ensure employees can return to work safely. Employers may also agree to temporarily alter employee’s roles so they are able to perform tasks where less or no contact with other people is required. Where temporary adjustments to a role are not possible, employers can ask employees to take holiday (employers need to give twice as much notice as the amount of holiday being taken), allow the employee to be furloughed or discuss unpaid leave.

27. How should I deal with someone on maternity or paternity leave who now wishes to return to my business to claim 80% (or £2,500) furlough pay?

Women on maternity leave must take the minimum maternity leave period off work (two or four weeks as relevant) following the birth of their child. Following this if they wish to return to work they can do so in line with the usual notice periods. This would constitute an end to their maternity leave.

28. What about employees who get maternity allowance?

If your employee is receiving Maternity Allowance during their period of maternity leave, they should not get furlough pay at the same time.

If your employee has agreed to be put on furlough, tell them to contact Jobcentre Plus to stop their Maternity Allowance payments.

29. Can I make staff redundant whilst they are on furlough leave?

The usual processes and procedures regarding redundancy remain in place. Therefore, a redundancy process can run alongside furlough leave. If you are contemplating terminating someone’s employment for redundancy prior to the end of the furlough period, there is a risk that could be unfair, although this has not been tested in the Tribunals yet.

You can continue to claim for furloughed employees who are serving a statutory notice period however grants cannot be used to substitute redundancy payments.

If you are making 20+ staff redundant within a 90 day period please take legal advice on collective consultation and statutory requirements.

30. Is statutory redundancy pay and statutory notice pay based on an employee’s normal wages or the decreased furlough wage?

If you make an employee redundant, you should base statutory redundancy and statutory notice pay on their normal wage rather than the reduced furlough wage.

31. I am a director. Can I be furloughed?

Yes, you can be furloughed if you are a PAYE director. You will not be able to do any work except where you are complying with your statutory duties as a director.

We would recommend that sole directors, in particular, take specific legal advice on their obligations and ability to work if they are considering furloughing themselves.

32.What about employees who have been TUPE’d after 28 February 2020? Can I furlough them?

The government has clarified that a new employer is eligible to claim under the scheme in respect of the employees of a previous business transferred after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.

This, therefore, means that if a new employer has employees which were on furlough leave prior to transfer, that they can continue the furlough leave. If the employees were not on furlough leave prior to transfer, they can be put on furlough leave if the new business owner chooses to do so. The decision to furlough is at the new employer’s discretion.

33. Can TUPE’d employees still be claimed for under the furlough extension?

For claim periods after 1 November 2020, a new employer is eligible to claim in respect of the employees of a previous business transferred if the TUPE or PAYE business succession rules apply to the change in ownership. The employees being claimed for should have been employed by their prior employer on or before 30 October 2020 and transferred from them to their new employer on or after 1 September 2020.

34. How should I deal with holiday?

Holiday continues to accrue during furlough leave for staff – please see our article on holiday here.

HMRC updated their guidance for employees’ on 12 May 2020 stating that it is possible to take annual leave on furlough. If they do, the employer will have to ‘top-up’ to 100% of normal pay.

HMRC have said that they will keep this policy under review and it may change.

35. Will the company’s claim information be made public?

For the month of December onwards, it is a condition of making a claim that the employer accepts that the HMRC will publish information about furlough claims on the internet. This includes the name of the employer and a “reasonable indication” of the amount claimed.

36. Is it possible to rehire and then furlough workers recently made redundant?

The Chancellor’s announcement on 5 November states that under revised scheme, anyone made redundant after 23 September can be rehired and put back on furlough.

Job Support Scheme (JSS)

1. What is the Job Support Scheme?

The JSS is divided into two parts – JSS Open (for businesses operating but where employees are working at least 20% of their usual hours) and JSS Closed (where the business is legally required to close its premises due to coronavirus restrictions). Under the JSS Closed, the government would have paid 67% of employee wages, up to a maximum of £2,083.33 a month. Under JSS Open the position was more complicated but the government contribution was capped at a maximum of £1,541.75 per month and the employer contribution was capped at £125 per month.

2. I have already put in place JSS Open Agreements. What should I do now?

Employers should contact those affected as soon as possible to explain that the government (as of 31 October) has made a decision to extend the furlough scheme which is more generous than the JSS Open and JSS Closed and ask them to agree to continue on furlough instead. A new Furlough Agreement is likely to need to be issued to confirm the variation to contract.

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Further information

For specific advice for your business, please get in touch with our specialist Employment Law team through this website or by calling 0330 404 0778.

Our partners at Ashtons HR Consulting are also on hand to assist you.

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This information is correct at 1pm on 18 March 2021.