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Furloughing 3.0 – extended until September 2021

March 3 2021 by Gayatri Wood

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 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, 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?

To be eligible for this extension, employees must have been on the payroll by 30 October 2020, but they don’t need to have been furloughed before. Anyone made redundant after 23 September, can be rehired and put back on furlough.

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.

To furlough a member of your team, follow our step by step guidance.

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.

Is there a maximum number of claims I can make under the updated scheme?

Yes, the number of employees in a single claim period can’t exceed the maximum number of employees you have previously claimed for before 30 June 2020. For example, if you made a claim for 5 employees in March, 15 employees in April and 12 employees in May, the maximum number of employees you can now claim for in any single claim period is 15 employees.

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 over the Christmas period.

Our advice

Think about what your business will need throughout Lockdown #2 and beyond. This will be helpful in directing you in 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.

 

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