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4th June 2020

Legal Issues – Furlough Update (4 June)

Although much of the attention after the Chancellor’s announcement on Friday about changes to the Coronavirus Job Retention Scheme (CJRS) was focused on the options for part time work while on furlough and to the gradual increase in the employers’ share of the costs of the scheme in August, September and October, employers should be wary of the introduction of a restriction to CJRS which takes effect next week.

Employers need to aware that any claims for furlough leave for periods after 30 June 2020 will only be possible in respect of employees they have previously furloughed for a 3 week period.  Added on to that is the extra condition which says that the 3 week period must be completed by no later than 30 June 2020.  No reason has been given for that deadline but it has been declared and needs to be factored in to decisions now.

While many employers will already have used CJRS for the employees they want to involve and will be free to have them on or off furlough as required, we are aware that some businesses (e.g. schools who could furlough teachers once the term ends) are still considering their options and this announcement has restricted them significantly.  Given the need to complete a 3 week block of furlough by 30 June, the latest an employee can be placed on furlough for the first time is 10 June 2020 which only gives employers a week to decide.   If an employee is not already on furlough by then, the scheme will not be available to them at any time in future.  Employees in that category either need to work and be paid or managed appropriately, be that by varying hours and pay or possibly considering redundancy.

Looking at the practicalities of getting grants paid, the Government has also confirmed that claims for any furlough period up to 30 June 2020 have to be made on the portal by 31 July 2020.  Setting this deadline is presumably intended to make sure that all claims under the original scheme (before the introduction of part time furlough) are dealt with before the rules change and the more complicated claims for part-time leave are submitted.  While most employers will have this in hand and be claiming promptly, this is an important deadline and failing to comply will be expensive.

Going forward, a modified system for claims is also being introduced meaning that from 1 July onwards, portal claims have to be made for a single pay period and cannot overlap pay periods (in this context a pay period is a calendar month).  Employers who pay staff monthly should not be affected by this as there is no overlap with the calendar months but for employers who pay with any other frequency, some caution is required to avoid claims being rejected or sent back for amendment and resubmission.  With the CJRS changing every month from now until 31 October 2020, this is a logical step to ease the administrative burden and hopefully speed up the payment process.

If you have any questions on any of the issues mentioned in the above article, please contact Russell Eadie.

4th June 2020