Urgent Review of Current and Prospective Furlough Arrangements

Furlough Leave Deadline Approaching: 9 June 2020

The background There has been considerable coverage in the press of the support available to employers during the COVID-19 pandemic, particularly regarding the Coronavirus Job Retention Scheme. Since March, the Scheme has enabled employers (subject to certain criteria being fulfilled and to certain limits) to place employees on furlough leave and to claim a grant via HMRC to assist them in meeting their commitments to pay staff salaries (plus National Insurance and limited pension payments).

Changes from 1 July 2020

The Scheme will change in two respects from 1 July 2020:

  • Employees, who were previously prohibited from undertaking any work for their employer whilst furloughed, will be able to return to work on a part-time basis whilst remaining on partial Furlough Leave.
  • The level of grant that will be payable by HMRC will be tapered between July and October 2020, as the Scheme is wound down.

Next steps

Further details about the varied Scheme are unlikely to be available until 12 June 2020. However, as an employer, you may need take action this week to protect your business. This is because there is a deadline of 9 June 2020 which must be met in the following circumstances:

  •  If you wish to place staff who are currently working on Furlough Leave, you must reach an appropriate agreement (in writing) with them by 9 June 2020, to the effect that they will commence their Furlough Leave on 10 June 2020.

    A member of staff must be on Furlough Leave for three weeks before the grant will be payable and the Scheme will close to new furloughers at the end of June. Until 1 July 2020, anyone on Furlough Leave cannot work for their existing employer.

  •  For the same reasons explained above, you should consider conducting an urgent review before 9 June 2020 of any existing furlough agreements in place to ensure that they are fit for purpose for the varied Scheme terms.

    It is also crucial to appreciate that the flexibility around “swapping” employees who are working/on furlough will not be available to the organisation from 10 June 2020 (in terms of being able to claim a grant for furloughed (or partially furloughed) staff). This is because the grant (in its varied form) will only apply to those who are on Furlough Leave as at 10 June 2020. Accordingly, whilst staff can come back from Furlough Leave, either fully or partially, in the case of the latter, the (reduced) grant will only be payable if that person has been furloughed since 10 June 2020.