Employment Law Update - Covid-19 - Furlough Leave – another layer of complexity thrown in
The Government has now issued further guidance on how furlough leave will work from 1st July when it is possible to furlough an employee on a part-time basis. By now you will be aware that the changes are hardly likely to be straightforward.
Broadly, if an employee hasn’t been furloughed by now (10th June was the deadline for first furloughing) a business will not be able to furlough them at any future point.
There is an exception for those returning from various forms of family friendly leave – maternity, adoption, shared parental, paternity or parental bereavement. This is provided that it started before 10th June and finished after this date and the individuals are on the business’ PAYE payroll on 19th March.
From 1st July the total number of employees on furlough leave cannot exceed the maximum on furlough leave at the business during any previous claim period (although returners from family friendly leave can be added to this number).
Also from 1st July there will no longer be a minimum furlough leave period albeit that employers will only be able to claim at their payroll intervals. It will be possible to bring an employee back on a part-time basis. The employer will be responsible for paying the employee in full for the hours worked. An employer can be flexible in relation to those hours and they can vary. The employee does though need to agree in writing to the flexible furlough arrangements.
That is the easy bit. The calculation of the furlough pay is not so easy. For an employee with fixed hours HMRC will look at the fixed hours worked in the pay period prior to 19th March 2020 and compare the hours worked in the period claimed for and the Government contribution will be calculated based on the difference. For those working variable hours HMRC will take the higher of the average hours worked in the previous tax year or the hours worked in the same pay period for the previous year in undertaking the calculation. The trouble is that it won’t be HMRC which will be doing the calculation in the first instance. All the best to those that have to do it manually! There is a worked example on the Government website. However, all this does is show how complicated it is. In the example given the employee had a fixed 40-hour week and has been asked to work 4 hours per day, 5 days per week i.e. 20 hours per week. Applying the 80% rule payment due when he was on ‘full-time’ furlough was £2,400. Now you might think that on the basis that he is working half time the furlough payment would be £1,200. Well, that is of course too simple – the answer is £1,159.55. I will leave you to go to the website to see how this figure is worked through.
Employers have needed encouragement to get employees back on a part-time basis for some time rather than encouragement not to provide work to employees. The complexity of the calculation is a shame.
Nigel Tillott, Head of Employment and Regulatory Law, Tel: Direct Dial: 01452 689100