Partner Sue Dowling, in Blandy & Blandy’s leading Employment Law team, explains the impact of the extended Furlough Scheme on employers and employees and highlights the importance of adhering to employment law when implementing any changes.
On Saturday 31 October 2020, Prime Minister Boris Johnson announced that England will be placed in a ‘Tier 4 lockdown’ from Thursday 5 November.
The Furlough Scheme – What Has Changed?
As a result, the Government confirmed that the Coronavirus Job Retention (“Furlough”) Scheme, originally set to end on the day that the announcement was made, will be extended for a further month through November.
During that time, employers will be able keep employees on Furlough (be it full or part-time furlough) or to place staff on furlough (for the first time or to place staff on further furlough), again on a full or part-time basis.
As neither the employer nor the employee needs to have previously used the Furlough Scheme, employees who have not previously been furloughed can be put on furlough, with their consent, during November provided that the member of staff was on the employer’s PAYE payroll on 30 October 2020.
Employers will need to report and claim for a minimum period of seven consecutive calendar days.
Under the extended Scheme, essentially the same arrangements will apply as applied in August 2020, so furloughed workers will, with their agreement, receive 80% of their current salary for hours not worked, up to a maximum of £2,500 (gross). Employers will only be required to cover National Insurance (NI) and employer pension contributions. As per the previous Furlough Scheme, employers can decide to top up an employee’s wages.
What about the Job Support Scheme?
The Job Support Scheme, which provides employers and employees with a reduced level of support, is still expected to follow on from the Furlough Scheme, when it ends. However, this may change so look out for future updates on our website.
What about the Job Retention Bonus?
Employers will continue to be eligible for the £1,000 Job Retention Bonus.
Businesses in England required to close their premises due to lockdown restrictions will be eligible to receive additional grants worth up to £3,000 per month (based upon the rateable value of their premises) under the Local Restrictions Support Grant. The Government has also said that it will provide a further £1.1bn to Local Authorities to enable them to support businesses more broadly.
Further guidance on the above schemes is expected shortly so please review our webpages regularly.
Adhering to Employment Law – Putting the Required Furlough Agreement in Place
It is important to realise that the Furlough Scheme must be operated by employers in accordance with general contractual and statutory employment law requirements.
Specifically, in many scenarios, it is not open to an employer simply to unilaterally impose a contractual change on an employee (for example placing the employee on furlough leave and imposing a 20% reduction to his/her salary). In most situations, the specific written consent of the employee will be required (as documented in an appropriate Furlough Agreement), detailing the agreed variation to the employee’s contract of employment. Collective Consultation requirements may also arise if an employer is proposing to vary the contracts of 20 or more employees (in certain circumstances).
Specialist employment advice relating to the recent Furlough Scheme changes or any other employment aspect, for employees and employers, is available from our specialist Employment Law team.