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In December 2020, we predicted what might happen after the Coronavirus Job Retention Scheme (Furlough Scheme) ended on 30 April 2021.
At the time, the most likely scenarios seemed that the government would introduce a new (highly controversial) scheme called the Job Retention Scheme, or they would extend the Furlough Scheme. It seemed unlikely that the government would drop job retention schemes altogether given the continuing coronavirus pandemic.
As predicted, in March 2021, the government announced it was extending the Furlough Scheme to a new deadline of 30 September 2021.
Here we cover how the extended scheme works and how it affects employers and employees.
Employers will be able to apply for the same level of grant until 30 June.
To receive furlough money, employers must continue to pay their employees 80% of their wages, up to a cap of £2,500 per month for the time the employee spends on furlough leave. In May and June, the employer can claim that 80% from the government, up to a cap of £2,500 per month.
Employers can choose to top us their employees’ wages above 80% or the £2,500 cap for hours not worked at their own expense. However, they are not required to.
Employers will be required to make employer National Insurance contributions (NICs) and pension contributions as normal.
From 1 July, the level of grant employers can get will be reduced and they will need to contribute towards their furloughed employees’ wages for hours not worked.
Employers must continue to pay their employees 80% of their wages, up to a cap of £2,500 per month for the time the employee spends on furlough leave.
However, the government’s contributions will reduce as follows:
For employees, this means they will continue receiving 80% of their wages or a maximum of £2,500 per month for hours not worked until the end of the Furlough Scheme.
Employers can choose to top us their employees’ wages above 80% or the £2,500 cap for hours not worked at their own expense. However, they are not required to.
Employers will also be required to make employer National Insurance contributions (NICs) and pension contributions as normal.
From 1 May 2021, employers can claim for an employee who was employed on 2 March 2021 where they have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying payment of wages. Said employee does not need to have been claimed for under the Furlough Scheme before 2 March 2021 to be able to claim for periods on or after 1 May 2021.
Under the extended Scheme, employers can still flexibly furlough their employees and bring them back to work as and when needed. So, employees can work any work pattern and still receive 80% of their wages up to £2,500 for hours not worked.
For some employees, the prospect of a further five months on furlough leave and reduced wages may not be appealing.
Employers should talk to their employees before making changes to their employment contract and gain their agreement in line with employment law. They should also involve employees in the decision-making process where appropriate, such as when deciding who to offer furlough leave to, taking into account equality and discrimination laws and the individual needs of employees.
To be able to furlough an employee, the employer must confirm to the employee in writing (or reach an agreement with the employee’s trade union) that they have been furloughed. If the parties change the agreement later on – for example, the employee moves from full-time furlough to flexible furlough – a new written agreement should be produced.
If an employee absolutely refuses furlough leave, employers may consider whether redundancy is the only viable option. However, seeking specialist legal advice before doing anything is essential to avoid an unfair dismissal or redundancy dispute.
As under the original Furlough Scheme, employers cannot ask employees to work while on furlough or allow them to work. This includes asking employees to do ‘voluntary work’ such as admin.
For some employees, the extended Furlough Scheme may be a lifeline. For example, for those struggling to balance childcare, caring responsibilities or need to shield due to the Covid-19 pandemic.
As before, employees can ask their employer to place them on furlough leave. However, the final decision lies with the employer. The government’s guidance about shielding officially came to an end on 1 April 2021, but furlough may still be used for people who are clinically vulnerable or who have caring responsibilities due to Covid-19.
The employer should take care to be fair and avoid discrimination when deciding who should and should not go on furlough leave. This can be a bit of a legal grey area, so it is important to take legal advice before taking action.
If furlough is not possible, employers still have a responsibility to keep their employees safe, including allowing employees to work from home where possible and implementing vital Covid-19 health & safety measures.
No further support has been announced. The Job Support Scheme and Job Retention Bonus, which were originally due to come into effect after the Furlough Scheme ended in late 2020, appear to have been withdrawn indefinitely.
So, it appears the intention is for employees to return to work. If this is not financially feasible, the employer may consider redundancy.
Are you an employer or employee in need of specialist employment law advice about the Furlough Scheme? Get in touch with our employment law solicitors in Chichester, Fareham or Havant by giving us a call or filling in our online enquiry form.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice, and should not be relied upon as advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. All content was correct at the time of publishing. Legal advice should always be sought in relation to specific circumstances.