Furlough Clarification & FAQs
The last few weeks have involved a significant amount of change to the furlough scheme and last week was exceptionally busy with the government guides being updated almost daily, before the Treasury Direction (TD) was subsequently published late on Friday afternoon.
Our previous updates have summarised the extension details, but to draw special attention to several other key points that you may have missed:
- Employers will need a written agreement to either extend furlough or put new employees on furlough BEFORE claiming the grant.
- Although the process for making a furlough claim is the same, there is a shorter claim window. Claims relating to November 2020 will have to be made by 14 December 2020, with claims relating to each subsequent month being submitted by day 14 of the following month.
- For claim periods starting on or after 1 December 2020, employers cannot claim for any days during which a furloughed employee is serving a contractual or statutory notice period.
- The CJRS will be reviewed in January 2021 to see if economic circumstances have improved enough to ask employers to contribute more, which means the 80% government contribution may not last for the duration of the extension.
- For December 2020 and January 2021, HMRC will publish the names of companies and Limited Liability Partnerships (LLPs) who have made claims under the scheme for those months, together with details of either the exact amount claimed or a “reasonable indication” of the amount claimed.
Frequently Asked Questions
Do we have to show that employees agreed to being furloughed?
Yes – you will need to show that furlough was agreed or confirmed in writing. If employees are on rotating or part-time furlough, this should also be agreed or confirmed in writing.
The TD says that the agreement must specify the main terms and conditions upon which the employee will cease all work in relation to their employment.
Timing: The TD also confirms that if you’re seeking to claim (wholly or partly) for a period between 1st November and 13th November, then you must have had a written agreement in place on or before 13th November. Otherwise, the agreement must be made before the beginning of the period to which the clam relates.
If you didn’t have a furlough scheme in place in time, then you are likely to have to pay full pay for the intervening period.
Can we only use the scheme if it would avoid redundancies?
The government initially indicated that the CJRS was an alternative to redundancy, lay-off or unemployment. The latest employer guidance states that employees can be furloughed if you “cannot maintain your workforce because your operations have been affected by coronavirus”.
The latest employee guidance refers to using the furlough scheme if “they are unable to operate or have no work for you to do because of coronavirus”. It goes on to state that the scheme is designed to help employers whose operations have been severely affected by coronavirus to retain their employees and protect the UK economy, although all employers are eligible to claim under the scheme and the government recognises that different businesses will face different impacts from coronavirus.
Ultimately, it seems that employers may be allowed some discretion, but they should not be abusing the scheme.
We had employees on furlough until 31st October – what are our options?
Employees can remain on full-time furlough until the scheme closes at the end of March – although you’ll need their agreement to remain on furlough for this period if you do not already have it.
You could also agree that employees will return to work part-time, whilst remaining on part-time furlough.
However, regardless of the pattern of furlough implemented you had to have an updated written agreement in place by 13th November to be able to claim from 1st November.
This backdated agreement will be dependent on the employee genuinely having been furloughed during this time. If the employee has actually been working all of their usual hours, furlough cannot be backdated.
Can we re-furlough employees who are currently back at work?
Yes, there is no limit on re-furloughing employees under the extended scheme.
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 7 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.
We previously agreed to top up salary to 100%. Do we need to continue this arrangement until the end of January or March 2021?
No, but you may need a new or extended furlough agreement if you want to reduce furlough pay between now and either January or March (depending on how the terms of the existing agreement were framed).
Can we claim notice periods under the grant?
The TD confirms that employers cannot claim for any day when an employee is serving statutory or contractual notice between 1 December 2020 and 31 January 2021 (this includes employees serving notice of retirement or resignation).
This is a departure from the previous scheme and employers considering dismissals should be aware that the costs of notice pay after 1 December will no longer be covered by the scheme. Also, note that the grant cannot be used for redundancy payments.
- If you’ve already given notice to a member of staff and this is due to expire at any time before midnight on 30th November, then you can make a claim in respect of this period.
- If you’ve already given notice to a member of staff and this doesn’t expire until 18th December (for example), then you can continue to claim part of their notice under the grant until 30th November, but for the period between 1st – 18th December, this cannot be claimed and must be paid for in full by the employer.
- If you haven’t given notice to someone yet but are midway through consultation that means you may give notice after 1st December, then you must pay all of the notice pay in full and cannot recover any of this from under the grant.
Is there a deadline for claims?
The deadline for claims up to and including 31 October is 30 November 2020.
Claims relating to November 2020 will have to be made by 14 December 2020. Claims relating to December 2020 should be submitted by 14 January 2021, and claims relating to January 2021 should be submitted by 15 February 2021. For employers with a significant number of employees on furlough, this means they will need to plan ahead and be organised in order to avoid paying employees but missing the deadline to reclaim the government contribution.
The TD says HMRC may accept late claims if there is a “reasonable excuse” however, there is no guarantee that late claims or amendments will be accepted, so it is important to meet the deadline if possible.
Can we re-employ staff previously dismissed and furlough them?
Employees who were on the payroll on 23 September 2020 who were since been made redundant or stopped working for the employer can be re-employed and put onto the furlough scheme. However think carefully before doing so.
If former employees who have been made redundant ask to be re-hired, there is no legal obligation on the employer to do so – but employers may feel a considerable degree of moral pressure, particularly if there is a real possibility that circumstances may change so that the employee will be able resume active employment next March.
Employers will need to weigh this against:
- The additional cost of employer NICs and pension contributions and any potential increase to contributions.
- They will also need to consider what to do about any redundancy payments already made – you could seek to request that these are repaid but the employee may have already spent this.
- Continuity of service will be preserved so staff who were previously under 2 years’ service may acquire over 2 years and be entitled to additional obligations, costs and protections on dismissal.
- On any subsequent dismissal you would have to pay notice pay, accrued but untaken holiday and potentially a redundancy payment again.
We recommend you take advice on this issue before making a decision.
- The government has published several policy papers Fair warning, this is updated regularly and there are 12 other guides available on the Gov website.
- A new Treasury Direction(TD) under the Coronavirus Act 2020, which extends the scheme until 31 March 2021 and sets out the legal framework for the scheme from 1 November 2020 to 31 January 2021