Furloughing 3.0 – extended until September 2021

There has been another update to the furloughing scheme which will see it extended until September 2021. However, from July onwards the government’s contribution will gradually reduce, with employers asked to contribute more (see more info below).

The furlough scheme subsidises the wages of people who can’t do their jobs, either because their workplace is closed, or because there is no longer enough work for them.

Will it be any different from the original scheme?

The scheme is back to how it was at the beginning. The government will cover the full 80% (up to £2,500 per month), with the employer only covering pension and national insurance contributions until the 30th of June. After this, employers will be expected to pay 10% of employee’s wages, and in August and September that rises to 20%.

Since July 2020, employers have been able to bring back employees part-time, and furlough them for the rest. This will continue, you can still use flexible furlough.

Which employees are eligible for the scheme?

• For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as you have made an RTI submission to HMRC between 20 March 2020 and 2 March 2021. This means employees that have been employed between November 2020 and February 2021 will be eligible to go onto flexible furlough from 1 May 2021.

The scheme can cover:

• Full-time employees
• Part-time employees
• Employees on fixed-term contracts
• Employees on flexible or zero-hour contracts
• Agency workers
• Apprentices
• Company Directors
• Salaried Members of LLPs

What are the requirements of furloughing an employee?

An employee can be furloughed if:

• The employee has been instructed by you to cease all work in relation to their employment
• The reason for the instruction to cease work was due to circumstances of the coronavirus
• The employer and employee must have agreed in writing that the employee will cease work. The agreement can be made via email.

Although most people will have gone through this process already, it’s important to remember you would need to do this each time you furlough someone if they have previously returned to work full time. We’ve kept a link to our step by step guidance on how to furlough a member of your team live for you to refer to.

Can I top up my team wages to 100%?

Yes – you can but there is no obligation to do so. Whether you intend to furlough on 80% or top up out of your own budget your decision should be made clear to the employees when seeking their consent for furlough.

How to make the calculations

HMRC have now released their calculator to work out the furlough claims for individual employees.

It has been clarified that if someone was on payroll on 19 March 2020, you use their salary at that date to calculate the furlough claim for November onwards. This is regardless of whether they have been furloughed previously and if their pay has been reduced or increased after this date. If they weren’t on payroll on 19 March 2020 and were employed at some time between 20 March and 30 October, then you use their salary from the RTI submission on or before 30 October 2020.

Holidays while on furlough

You can’t put an employee on furlough just to cover their holiday. However, a furloughed employee can request a holiday in the normal way. If approved, each day of the holiday while they’re on furlough should be topped up to their normal daily pay. This includes any bank holidays.

Our advice

Think about what your business will need. This will be helpful in directing you on what to do next. There are likely to be three categories your team will fall into:

• People who will have work to do in your business when the furlough scheme ends;
• People with no prospect of work in your business for the foreseeable future;
• People with no prospect of work, but they are so talented and such a good culture fit that you’ll find a role for them

As leaders, we’ll be remembered for how we looked after our people at this time. By starting to plan now, it gives you time and space to do this right.

What happens if I need some help?

At Wow, we can help you with calculations and work out how much you will pay and recoup in different scenarios. We can also help run your payroll and submit your furlough claims.

You should still get HR advice for your own situation. If you are a Wow client, you have access to our free HR helpline. If you need the details again, please let us know. If you’re not, we can put you in touch with an HR consultancy.