The Government Job Retention Scheme has been extended until 31st October for those employers with a UK bank account who were operating PAYE on 19th March 2020.
The Scheme enables employers to continue to furlough employees, including supply teachers working for employment businesses or umbrella companies. The employer receives a grant to cover 80% of an employee’s usual wage or £2,500, whichever is lower, provided the employee was employed on 19th March and on the PAYE payroll on or before 19th March 2020.
Whilst this remains in place, the Government has introduced a number of key changes to the way in which the scheme operates going forward. Notable changes are:
- On10th June, the scheme closed to new entrants who had not been furloughed for a minimum of three weeks, unless an eligible employee was on a period of statutory leave (e.g. maternity leave) which had begun prior to 10th June.
- From 1st July, employers will have the flexibility to bring back furloughed employees part time (flexible furlough).
- Employees, including those on variable hours (e.g. supply teachers), will be able to work for some of the week and be furloughed for the rest, with the employer claiming a grant proportional to the hours not worked.
- The hours of work and the hours of furlough will need to be agreed in writing.
- Employees can enter into flexible furlough arrangements more than once.
- From July onwards, whilst the amount received by eligible employees remains at 80% of wages, capped at £2,500, the way in which the payment is comprised changes.
- From August, employers will be expected to pay employers’ national insurance contributions (NICs) and relevant pension contributions.
- From September, employers will be expected to pay 10% (up to £312.50) towards the employee’s furlough pay and the Government will pay 70% (up to £2,187.50).
- In October, employers will be expected to pay 20% (up to £625) towards the employee’s wages and the Government will pay 60% (up to £1,875).
- From 1st July, the three-week minimum period for which employees can be furloughed, including supply teachers, has been removed.
- Each claim period an employee makes after 1st July, must start and end within the same calendar month and must be at least 7 days, unless the employee is claiming for the first few days or the last few days in a month.
If an employer opts to utilise flexible furlough, they need to work out 80% of an employee’s usual wage in order to determine how much to claim as a grant and how much to pay as the employer under the revised scheme.
From 1st July, the employer claims a pro rata amount of 80% based on the proportion of hours not worked out of the employee’s normal working hours (‘usual hours’ ).
- For full-time or part-time employees, ‘usual hours’ are based on the number of hours worked in the relevant pay period before 19th March 2020.
- For employees whose pay varies, such as supply teachers, ‘usual hours’ are the higher of either:
- the average number of hours worked in the tax year 2019 to 2020; or
- the corresponding calendar period in the tax year 2019 to 2020.
As with the previous Job Retention Scheme, both the employer and the employee must agree the furlough arrangement, including a new agreement if moving to flexible furlough. The employer has to notify the employee in writing and this should be retained by the employer for five years. If the employer reaches a collective agreement with a trade union, such as the NASUWT, that is also acceptable for the purpose of the scheme. Indeed, collective consultation may be required depending on the numbers involved.
Employers are now expected to retain records detailing the number of hours employees work and how many hours employees are furloughed, together with the details of the amount claimed and the relevant calculations for six years.
Despite these changes, it is important to note that an employer can continue to keep all of its employees on ‘full furlough.’ In this instance, an employee is not able to undertake any work for that employer or any organisations linked to that employer.
Under the Job Retention Scheme, there is nothing that prevents your employer from topping up the salary you receive to 100% of your normal pay.
There is nothing to prohibit an employee undertaking work for another employer while furloughed or on ‘flexible furlough’ with their current employer(s).
Any income received under the Job Retention Scheme is still subject to all statutory deductions, such as tax and NICs, as well as any pension deductions as appropriate.
The Government has also confirmed that the entire grant must be paid to the employee - no part of the Job Retention Scheme can be held back by the employer, e.g. deductions for fees, administration of the Scheme.
The Government will only fund the minimum mandatory employment contributions for pensions for those employees who are furloughed.
The Job Retention Scheme applies to each employer individually, so an employee, as well as supply teachers as agency workers, could be in receipt of 100% of their wages from one employer whilst in receipt of 80% of their wage from the employer that has furloughed them.
This is supported by advice from both HMRC and Acas which makes it clear that each job contract is treated separately.
Employees are advised to check their contract carefully to see how they are employed and whether there are any restrictions on who they are able to work for, although the employer may be content to waive any such restrictions.
For supply teachers working through an agency, whilst furloughed by an agency, a supply teacher is not able to undertake any work for that employer/agency, including undertaking or continuing other assignments at different schools that are the clients of the agency.
However, a number of supply teachers are signed up and work for a number of different supply agencies.
As these are each separate agencies/employers with separate PAYE reference numbers, there is nothing to stop a supply teacher working for one agency/employer whilst furloughed or flexibly furloughed with another, or both.
If an employee started unpaid leave after 28th February 2020, you can put them on furlough instead as long as this was done by 10th June and lasted for a minimum period of three consecutive weeks between 1st March and 30th June 2020. If you put them on furlough, then you should pay them at least 80% of their regular wages, up to the monthly cap of £2,500.
If an employee went on unpaid leave on or before 28th February 2020, you cannot furlough them until the date on which it was agreed they would return from unpaid leave. The final date by which an employer could furlough an employee for the first time was 10th June 2020.
If an employee is shielding or on long-term sick leave, they can continue to be furloughed from 1st July as long as a claim had previously been submitted by the employer for a period of furlough for at least three consecutive weeks from the period between 1st March and 30th June 2020.
If an employee is signed off sick and in receipt of statutory sick pay (SSP), the employer can put the employee on furlough, provided that they are no longer in receipt of SSP. They can continue to be furloughed from 1st July as long as a claim had previously been submitted by the employer for a period of furlough for at least three consecutive weeks from the period between 1st March and 30th June 2020.
If an employee is furloughed and becomes sick, there is nothing to stop the employer paying them at the furloughed rate provided this is at least the equivalent of SSP.
If an employee undertakes training whilst furloughed, they must be paid at least the national minimum wage/national living wage (NMW/NLW), even if this would equate to more than 80% of their wage.
Those on maternity leave, adoption leave, paternity leave or shared parental leave (SPL) are still eligible for statutory entitlements at 90% in the first six weeks and then 90% or statutory maternity pay (SMP), whichever is lower. However, the average weekly earnings may need to be calculated differently for those employees on furlough who started a period of leave on or after 25th April 2020.
Enhanced schemes (i.e. the Burgundy Book) would be included in the wages that can be claimed if the employee had been previously furloughed and began their period of leave on or after 25th April 2020.
As employees are still employed during the period of furlough, statutory holiday will accrue.
Employees are able to take holiday whilst they are furloughed and this should be paid at their normal rate of pay or, where pay varies, calculated on the average pay received in the previous 52 weeks.
Employers are therefore obliged to pay any additional amounts in excess of the grant received under the Job Retention Scheme, although the employer has the flexibility to restrict when leave can be taken.
For employees who do not usually work bank holidays, the expectation is that the employer either tops up the pay to the usual level received or they give a day of holiday in lieu.
The statutory minimum holiday leave entitlement of 5.6 weeks per year will accrue, but the precise amount of holiday left will depend upon how much holiday an employee has already taken.
If an employee has been unable to take all their statutory annual leave entitlement by the end of 2020 due to COVID-19, the Government has introduced a new legal right which enables them to carry over up to four weeks (28 days) of unused leave into the next two leave years if it is ‘not reasonably practicable’ to take some, or all, of the holiday due to COVID-19.
The remaining 1.6 weeks of holiday can be carried forward by one year by agreement.
Employees can return to their duties or have their contracts terminated. They would still be entitled to rights in respect of SSP, maternity, unfair dismissal and redundancy.
Please also refer to our Coronavirus FAQs for more detailed examples.