Thames Valley: The new furlough scheme explained

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 November 5, 2020, England entered a new month-long ‘tier 4’ national lockdown.

The Furlough Scheme – what has changed?

As a result, the Government confirmed that the Coronavirus Job Retention (“Furlough”) Scheme, originally set to end on October 31, 2020, will be extended until March 31, 2021. The Government said several days beforehand that the Scheme would be extended through November 2020 but this latest announcement means that it will have run for a full calendar year by its end.

Between now and March 31, 2021, 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, provided that the member of staff was on the employer’s PAYE payroll on October 30, 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. The Government has confirmed that a review of the level of support offered will be undertaken in January, which could potentially see that 80% figure reduced in the same was it was in summer and early autumn.

What about the Job Support Scheme?

Practically speaking, the planned Job Support Scheme, that had originally been due to replace the Furlough Scheme, will essentially be replaced by the extended Furlough Scheme for the time being. Please look out for future updates on our website.

What about the Job Retention Bonus?

The Job Retention Bonus, a £1,000 one-off payment to employers who have brought back workers from furlough and retained them until the end of January 2021, will instead be replaced by a new “retention incentive” to be introduced an “appropriate time”. Again, please look out for future updates on our website.

Additional Support

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 upwards of a further £1 billion 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 Blandy & Blandy’s specialist Employment Law team.