Employment Update July 2020

Posted Tuesday 14th July 2020

We are all aware that changes to the Government’s furlough scheme are on the horizon.  Jennifer Maxwell-Harris and Reema Jethwa of Joelson’s employment team comment on the new furlough arrangements:

From 1 July 2020, furloughed employees have been able to return to work on a part-time basis under the new Flexible Furlough Scheme. Employers pay in full for days worked and can claim under the CJRS for days not worked, subject to the relevant caps. Employers are not be required to contribute to employees 80% (capped at £2,500) furlough pay until 1 August 2020.

From 1 August 2020, employers will be required to pay the following contributions towards furloughed employees’ 80% (capped at £2,500) furlough pay:

  • 1 August 2020: Employers will be required to pay the employer national insurance contributions and employer pension contributions on the furlough pay.
  • 1 September 2020: Employers will also be required to pay 10% of employees’ pay, capped at £312.50. The government will pay 70% of employees’ pay, capped at £2,187.50.
  • 1 October 2020: Employers will be required to pay 20% of employees’ pay, capped at £625. The government will pay 60% of employees’ pay, capped at £1,875.

Do I need to have agreement in writing?

Flexible furloughing arrangements need to be recorded in writing.

If you want your employees to begin to work part-time after 1 July 2020, it is necessary for the furlough agreement to be amended by a side letter, or for a fresh furlough agreement to be entered into.

Can I furlough employees for the first time after 1 July?

It’s worth mentioning that the original CJRS scheme closed on 30 June 2020 and employees must have completed a three-week furlough period prior to this date in order to be eligible for the new furlough scheme.

If an employee was not furloughed for the first time by 10 June 2020 then the employer can’t claim their pay under either the pre or post 1 July 2020 CJRS scheme. This is because a full three-week furlough period is required prior to 30 June 2020 in order to qualify under either scheme.

There is no minimum furlough period from 1 July 2020. However, any furlough arrangement agreed between employer and employee reported in a claim to HMRC must still cover a period of at least a week.

Written records have to be retained. All communications with the employee regarding the furlough arrangement, including all copies of the furlough agreement, need to be kept for five years.

You must also keep a record of the claims for reimbursement for furloughed employees’ wages under the CJRS. The employer should keep a copy of all records for six years.

Redundancies on furlough

It is a sad fact that not everyone on furlough will necessarily be brought back to work owing to the impact of the Covid 19 crisis, with some sectors such as hospitality, travel and fashion particularly badly hit.

There are obvious practical difficulties that could arise in undertaking redundancy consultation while the vast majority of the affected employees are on furlough.  Virtual meetings and, where the employees concerned do not have the facility to participate in a video call, the possibility of conducting consultation meetings by telephone or in writing, are really the only way.

These issues may be particularly challenging where the obligation to collectively consult applies, where there is a statutory requirement to allow representatives with access to affected employees.

It’s important to be aware that obligations to consult still apply, even in this crisis.  Failure to consult properly gives rise to claims.

For more information and advice, please contact Jennifer or Reema.

This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.

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