Extending Furlough: What happens next?

Since March, most business owners and HR Professionals have found themselves on tenterhooks awaiting government updates. Will they be extending furlough and the Coronavirus Job Retention Scheme?

Extending Furlough

As we know, the scheme was originally scheduled to end in May; however, extension confirmations show that the CJRS may now be available until October, with fruther updates planned for the end of July. It has left a lot of employers with the question of how to communicate the extensions with staff correctly to safeguard their business.

  • New Statistics published this week revealed the job retention scheme has protected 7.5 million workers and almost 1 million businesses.

Acting Too Quickly

Some businesses were very quick to place employees on furlough and are now seeing that vital information may have been missing from their agreements.

Issues such as written confirmations, payment schedules and communicating the period of furlough have all been hot topics across HR Professionals. However, the new focus area is the process for extending furlough to support business requirements.

As we have said before, even if your staff are furloughed, as an employer you still have an ethical obligation towards their wellbeing even when they are not working as usual. As such, keeping employees informed of changes in processes can contribute to their understanding and mental wellbeing.

What Now?

It is essential that furlough agreements are updated as processes and updated legislation is released. This includes information such as holiday processes and sickness reporting. A key area of communication should undoubtedly be the likelihood of when the employee can be expected to return to work. This includes communicating where they are likely to be furloughed longer than anticipated.

This should be the case even where employers may not have a concrete return to work strategy as yet, particularly in sectors such as retail, hospitality and aviation. It is important to ensure the overall strategy for returning staff is thorough and transparent in communication. This allows staff to mentally prepare for changes to their new routine of staying at home.

This communication is not only crucial for the employee, but it benefits the business in several ways:

*Helps to generate records of legal furlough agreements;

*Builds accountability records for HMRC and possible claims mitigation;

*Supports the employment relationship positively;

*Encourages communication to support in identifying obstacles when reviewing return to work plans, and;

*Builds loyalty between the employee and the employer

Employer Contribution

Although the Government have confirmed they will be extending furlough, there is an extra element that employers are now going to have to consider.

“As we reopen the economy, we need to support people to get back to work. From the start of August, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff” – Chancellor Rishi Sunak

Here is a rundown of the timeline that has been suggested:

10th June:

This is the cut-off point for employers being able to place their employees on furlough.

1st July:

From this point, a business will be able to access furlough on a more flexible basis and they will be able to decide on a split that will support them in transitioning their employees back into the workplace. This ‘flexible furlough’ system means that an employee could work part-time and be furloughed part-time.

1st August:

Employers will have to begin paying their employee’s national insurance and pension contributions. Until this point employers had been able to claim them through the CJRS.

1st September:

From this date, employers will only be able to claim 70% of their employee’s salary (up to a maximum of £2,190). Employers will be required to contribute the remaining 10-30% depending on what they have agreed with their employee. They will have to make the wage up to at least 80% however.

1st October:

The CJRS will drop to a 60% contribution (up to £1,875) with employers having to contribute the remaining 20-40% depending on what they have agreed with their employee. They will have to make the wage up to at least 80% however.

31st October:

The furlough scheme will end.

Let Us Help You

We know that as this point employers may be considering the following:

* Returning some/all of their employees to work

*Keeping their employees on furlough for as long as possible

*Making redundancies

*Closing their business altogether

At Altum HR we also know that this is a challenging time for employers and so want to remind you that we are offering a FREE no-obligation 30-minute consultation call with one of our professional HR advisors to support you.

If you are considering making redundancies, please call and speak to us first and we may be able to offer you guidance on alternatives, or support you in making plans to protect yourself, your employees and the future of your business.

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