HCR Law Events

16 June 2020

Furlough: what is changing and when?

On 29 May 2020, the Chancellor announced a number of key changes to the Coronavirus Job Retention Scheme (CJRS). From July, schools will have more flexibility over their furlough arrangements and from August, schools will be required to contribute to furloughed salaries. The main aim of the changes is to support employers with bringing staff back to work.

A factsheet published by HM Treasury (which is available here) accompanied the initial announcement and provides further detail on the changes and how “flexible furloughing” will be implemented.

More recently, on 12 June 2020, the government guidance for employers and employees was updated to include a comprehensive guide on how the CJRS will change from 1 July.  The updated guidance for employers is available here.

The key changes of which schools should be aware are summarised below.

This note is correct at the time of writing, 16 June 2020.

The key changes

When is the final date that schools can furlough staff?

The CJRS will close to new entrants from 30 June 2020. After that date, schools will only be able to furlough those employees who have spent a full three weeks on furlough before this date (unless the employee has just returned to work from a period of statutory family leave (see below)). The final date by which schools could furlough employees for the first time was therefore 10 June 2020. One of the obvious ramifications of this for schools is that they are unlikely to have been able to furlough teachers for the summer holiday period; an area that was fraught with difficulty in any event.

The government has confirmed that an employee who has previously been furloughed for at least three consecutive weeks between 1 March and 30 June and has since returned to work could be re-furloughed after 1 July.

Schools can also furlough an employee returning from statutory parental leave after 10 June even if they are furloughing that individual for the first time. This is provided the school have previously submitted a furlough claim for another employee of at least 3 consecutive weeks prior to 30 June.

What is the minimum length of time that staff can be furloughed for?

Up until 30 June, the minimum length of time that an employee can be furloughed for is 3 weeks. The government has confirmed that, from 1 July, agreed ‘flexible furlough’ arrangements (see below) can last any amount of time and staff can enter into a flexible furlough agreement more than once. Although flexible furlough agreements can last any amount of time, unless otherwise specified, the period that schools claim for must be a minimum claim period of 7 calendar days.

How will the CJRS grant work from now until the end of October?

From 1 July 2020, the number of employees a school can claim for in any claim period cannot exceed the maximum number it has claimed for under any previous claim during the March to June operation of the CJRS. For example, for a school who had previously submitted three claims between 1 March 2020 and 30 June in which the total number of employees furloughed in each respective claim was 30, 20 and 50 employees, the maximum number of employees that school could furlough in any single claim starting on or after 1 July would be 50. Although, this may differ where schools have employees returning from statutory parental leave. Schools who have used a rotating furlough model will need to be mindful of this additional cap.

The 31 July is the last day that schools can submit claims for periods ending on or before 30 June. The first time schools will be able to make claims for days in July will be 1 July.

For June and July 2020, the grant will be available on the same basis as it is currently (i.e. the lesser of 80% of wages and £2,500) with the government also covering the cost of employer’s National Insurance contributions (NICs) and minimum auto enrolment employer pension contributions.

Over the remaining months of the CJRS (1 August to 31 October 2020), the intention is that the government will reduce its contribution with a corresponding increase in the employer contribution:

  • From 1 August: The government will pay 80% of wages up to a cap of £2,500. Employers will be required to pay employer’s NICs and pension contributions.
  • From 1 September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will be required to pay employer’s NICs and pension contributions and at least 10% of wages so that employees continue to receive the minimum 80% (up to a cap of £2,500).
  • From 1 October: The government will pay 60% of wages up to a cap of £1,875. Employers will be required to pay employer’s NICs and pension contributions and at least 20% of wages so that employees continue to receive the minimum 80% (up to a cap of £2,500).

What is ‘flexible furlough’ and how will it work?

Prior to 1 July 2020, employees on furlough could not undertake any work for their employer other than training.  From 1 July 2020, the CJRS will include an added level of flexibility to allow employers to bring employees back to work on a part-time basis for any amount of time and on any work pattern, dependent on the needs of the business and if it is safe to do so. This change is a month earlier than previously announced.

When working, employees should be paid their ‘normal’ wage and schools will be responsible for paying the employee for those hours, subject to tax and NICs. Employers will receive a furlough grant for the remainder of an employee’s usual working hours. The £2,500 cap on the furlough grant will be proportional to the hours not worked.

To be eligible for the grant, schools must agree with their employees any new flexible furloughing arrangement and confirm this in writing. The written agreement must be retained for a period of 5 years.

Schools will be able to agree with an employee how many hours they will work and when whilst on flexible furlough and this could change from week to week. This is because, as outlined above, when claiming the grant for furloughed hours, employers will be able to report and claim for a period of 7 calendar days at a time.

When staff are not working flexibly for the school and are ‘furloughed’, as was the case prior to 30 June, they must not undertake any work for the school (other than training).

In practice, schools will need to need to implement a system for tracking hours worked (and not worked) in order to determine how much they need to pay an employee and how much they can claim from the government. The employer guidance provides that “when claiming for employees who are flexibly furloughed you should not claim until you are sure of the exact number of hours they will have worked during the claim period. This means that you should claim when you have certainty about the number of hours your employees are working during the claim period. If you claim in advance and your employee works for more hours than you have told us about, then you will have to pay some of the grant back to HMRC.” The guidance is silent on what will happen in the event that schools ‘under claim’; we suspect that the ability to claim the amount under claimed will be lost.

Detailed guidance on the ‘flexible furlough’ arrangements, steps schools should take before calculating a claim from 1 July and how much can be claimed is set out in the employer guidance.

When will the CJRS close?

The CJRS will close on 31 October 2020.

If there are any further changes to the CJRS or the accompanying guidance, we will update schools further in due course.

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Hannah Wilding, Associate

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