Significant changes to the Government’s furlough scheme are due to come into effect on 1 July and cover the period until it closes on 31 October.
Flexible furlough
Flexible furloughing is available from 1 July. It is open to staff who had been furloughed on or before 30 June. In practice that means that the initial furlough period must have commenced on or before 10 June because of the current requirement for furlough periods to be a minimum of three weeks. It follows that staff who had not previously been furloughed cannot now be added, save for the important amendment to the scheme which entitles employers to add employees returning to work after a period of parental leave (in order to avoid the potential for discrimination).
From 1 July it is open to employers to decide the hours and shift patterns of employees according to the needs of their business. There is no longer a requirement for employees to take furlough in blocks of three weeks. However, there is a suggestion in the notes that in order to lodge a claim, an employee must have completed an aggregate of one week’s work in any particular calendar month, i.e. five days for an employee who works five days a week or three days for an employee who works three days a week. I would also suggest that the pattern should be changed no more than weekly, otherwise the operation of the scheme will become too unwieldy.
Days worked by staff must be paid at 100% in accordance with the contractual entitlement, unless there is a written variation to basic pay agreed with the employee.
All flexible furlough arrangements must be documented. This can be by a variation to the original furlough agreement and an exchange of emails would be sufficient for this purpose. However, as with all furlough records, the documents must be retained for at least six years, in case of any inspection by HMRC.
Employees can remain on full furlough until the scheme ends on 31 October.
Claims for periods ending on or before 30 June must be made by 31 July. Equally, the first date for submitting claims for July is 1 July.
From 1 August employers will be required to pay the Employer’s national insurance and pension contributions. In his speech making the announcement, Chancellor Rishi Sunak said that this would be equivalent to about 5% of the overall cost but I think that it will work out as more than that. For many employers, including in particular those that are office-based, this is still a very good option, particularly if those who are working from home (not furloughed!) are continuing to provide a basic service.
From 1 September, in addition to pensions and NICs the employer must contribute 10% to the cost of furlough because the level of Government support reduces to 70% (and the payment of 80% must be maintained).
From 1 October, again in addition to pensions and NICs, the employer contribution increases to 20% as the level of Government support reduces to 60%.
Overall, there is no doubt that this is a very generous scheme and is likely to provide a lifeline for employers who might otherwise have folded. For hospitality and similar businesses who can not trade at all, unless there is a second wave (which is quite possible), it is almost unthinkable that restrictions will prevent them trading beyond 31 October. I know that some specific businesses, e.g. theatres, are not expecting to open soon, but on 18 June, Northern Ireland announced that it is reducing social distancing in schools from 2m to 1m and I expect much more in a similar vein in the coming months. If not, there will simply have to be similar provisions over an extended period.
Self-employed Income Support Scheme
The first scheme remains available for new applications until 13 July. Here is the link: https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme.
Applications for the second grant open on 1 August. Individuals will be entitled to claim a grant equivalent to 70% of their average monthly trading profits, capped at £6570. The level of grant is therefore broadly equivalent to the furlough scheme. There is no requirement to have claimed under the first grant to be eligible for the second grant period.
