What's the updated position in relation to the furlough scheme - are new agreements required?

Posted in : Seamus Says - Employment Law Discussion on 6 November 2020
Seamus McGranaghan
O'Reilly Stewart Solicitors
Issues covered: Furlough scheme

Seamus: Just as I thought we were going to have to not talk about furlough any longer after talking about it from March time. Yeah, we've now got the position where Saturday night the Prime Minister announced an extension to furlough and that initial extension was really following on from the lockdown, Lockdown 2.0 as it was referred to in the media for England and there was a brief period on Saturday where we were all scrambling on Saturday evening to check whether or not there was going to be brought in on a UK-wide basis or whether it was just for England.

It's great to have the online community there over social media that you can get the answer much quicker by liaising with colleagues online. But thankfully, we've got clear guidance then that it was UK wide and then, of course, there was rumblings and follow-through yesterday that the Chancellor announced that the furlough scheme is going to be now extended to the 31st of March 2021, and importantly under that extension, the government are going to pay for 80% of wages for hours not worked up to a cap of £2500 and the employer will be required to pay the National Insurance Contributions and the pension contributions for those hours. So it's really back to where we were at in August 2020.

Conscious of the fact that the scheme will be reviewed and possibly revised in January 2021, in order to decide whether the economic circumstances are therefore, and if they've improved enough to ask employers to increase contributions. So although we're back to the government providing 80% and that there's no sort of sliding scale in relation to that for the next three months anyway, that could change in January 2021.

So, look, even from that point of view, Scott, looking back at that first poll there, that could impact matters in January. We'll just have to see how things develop. The job retention bonus that was also offered, that was going to be paid in January if you retained your employee until . . . paid in February if you retained your employee to January, that has been pulled back at this point and they're talking about looking at some other incentive scheme that might be deployed later down the line.

Key things are really are that employers will have flexibility to use the scheme for their employees for any amount of time or shift pattern. And so we're not back to that position we were in April time where you had to have, you know, be furloughed for at least three weeks. We have a clear position that we're going to have flexible furlough available, which is really good news given that that we are in this process at the minute of restrictions, and tighter restrictions in some industries than in others. Neither the employer or the employee needs to be previously claimed or being claimed for under the retention scheme to make a claim under the extended, so anyone that hasn't been previously furloughed can now be furloughed, and from going forward.

And importantly claims under the scheme can be made 8 a.m. on the 11th of November, and also importantly claims for November must be made no later than the 14th of December, so just picking those important points out so that nobody misses out there. And then it looks that it's going to be claims for each subsequent month that we have will have to be made by day 14 of following month.

And we want to cover off just in relation to mention about there has to be an agreement in place. So what the government have been clear about again is that any agreement that's in place between the employee and the employer to either be placed on furlough or flexible furlough, that it has to be consistent with employment equality and discrimination laws. It's nothing new there from April, but it's just a reminder that if you've any new employees start that haven't been previously furloughed, you will need to look to put an agreement together for them.

Also then that the agreement that is put in place, it doesn't need to be signed off or replied to by the employee, but again, it's best practice if that can be done and if those records to be held because we know that HMRC if they do inspections can go back for a period of five years. So it's important that the records are kept.

And there has been, and I'll just mention this briefly, there has been some discussion in and around the guidance. And you know, what the guidance says is that employers should discuss with their staff and make changes to the employment contract by agreement. And to be eligible for the grant employers must have confirmed to their employee in writing but they've been furloughed or flexibly furloughed. And there's this issue around the terms of the agreement, what the agreement must say, and it does say in the guidance that the agreement must reflect the hours the employee has actually worked or not worked over the period of the agreement. And it must allow the employer to satisfy the terms of the retention scheme so that they can make a claim for in relation to hours not worked.

 So this had led to some commentary where people are saying, well, then do I need them to issue a different letter every week on the basis that under flexible furlough I might need an employee to work 20 hours one week, maybe 15 the next, maybe up to 30 on another week? And that's specifically given the circumstances at the minute I think we've all noticed in our places of work that as people get notifications on the track and trace as they get positive tests where they have to self-isolate for other reasons that there can be fluctuation in staff and availability, so it's absolutely natural that there will be flexibility required in and around furlough and the hours that are worked and not worked.

From my point of view, and I know Scott we had a brief conversation about this, but I don't see the guidance as saying that you need to issue a fresh letter every week if hours are changing. My view is that you're better having an agreement in place that the employee is going to be either on furlough for a set period of time, or alternatively that it's going to be flexible furlough and make it clear in the written communication that may mean that there is flexibility to the hours worked, but that certainty and the surety for the employee is that they will never receive less than 80% of the cap of 3,500 for the hours that they haven't worked. Obviously, they get their normal remuneration for the hours that they worked.

So just to cover off that point, I don't think that there's a necessity to issue a fresh communication each week, or each month. And I think that you want to have a general communication that will cover you and obviously you need to retain your records for the hours worked or not worked for HMRC inspection so that you can file your claims under the scheme.

Scott: Yeah. Okay, so there's not a written agreement every week if it goes up and down, but there may be a number of people who were on the flexible scheme or weren't asked to do any hours. They went from off full time and getting 80% of their wage and as that was reduced and the employer had stopped paying. These people were still off but the employer might have topped it up to, by the time it was 10% or 20% whatever was required as the old furlough scheme continued, and we may be moving into a period where some employers are going, look, it's busy at Christmas. If you'd like to open, it's busy at Christmas, and we need you in for some time. And those can be furloughed, and I suppose the protection for the employee there is that they're still getting their 80%, but because it's more flexible that might not reflect what being in the old agreement. And so some employers may well need some kind of new agreement to say look, this is a flexible scheme. We might need you in. We're allowed to bring you in for some hours, you get paid for those. Any of the other hours are going to be topped up and you'll come up with your 80%.


This article is correct at 06/11/2020

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Seamus McGranaghan
O'Reilly Stewart Solicitors

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