Not designated 'furloughed' by 10 June? It may not be too late for your employer to claim for you under the Job Retention Scheme
If you have been instructed by your employer to cease all work, and your period of inactivity lasted for at least 21 days, then it is our understanding that if this was done with your agreement, it may be possible for this to be considered as a furlough period for the purposes of your employer claiming a Job Retention Scheme grant for you. This article explains the detail.
The Coronavirus Job Retention Scheme (CJRS) closed to new entrants from 30 June. Because of this, and because there was a three-week minimum furlough period, employers can now only claim a grant for people 'furloughed' before 10 June.
Our understanding is that if an employee was notified in writing by 10 June to cease all work for the employer for a period of at least three weeks, and they agreed to this, this period can be considered a 'furlough' for the purposes of making a CJRS grant. Note, that something simple like an email or text could be considered enough to have notified you in writing.
Employers may therefore be able to treat earlier periods of inactivity as furlough periods and to claim a grant for those earlier furlough periods on a backdated basis (similar to what happened at the start of Job Retention Scheme where employers could backdate 'furlough' to 1 March 2020 where appropriate) – provided they claim before the 31 July.
Who might this apply to?
In order for your employer to claim help with your wages through the Job Retention Scheme, under the scheme rules, you must be a 'furloughed' employee (basically, if your employer is unable to operate or has no work for you to do, they can keep you on the payroll if you agree – this is called being on ‘furlough’). To be eligible for the grant, your employer must have confirmed to you in writing that you have been 'furloughed' – in some cases employers will have asked employees to sign a furlough agreement but in other cases your employer might have simply sent you an email or text saying that there is no work available for you.
For the CJRS, the key requirement is that your employer told you, in writing, to cease all work and you agreed. It doesn’t matter whether the specific term ‘furlough’ was used, and it may be that some employers don’t realise that they have actually 'furloughed' workers. This may be particularly relevant for some casual workers and agency workers. Because these types of workers are often on zero-hour contracts, there are no specific changes needed to their terms and conditions for them to receive no pay – they can just be given zero hours. As long as they were notified in writing that they were not needed or there was no work for them to do, this may be a furlough period for the purpose of the CJRS.
Agency and umbrella company workers
We know that some employers have been confused about how the Job Retention Scheme applies to certain types workers, for example, some agencies and umbrella companies were interpreting the official scheme rules (at para 6.1), as meaning that in order to qualify as a furloughed worker, an employee needed to have been on a 'live' assignment that was suspended or terminated as a result of the coronavirus (because you cannot 'cease' to work if you are not already working).
HMRC indicated to us in early June that this is not necessarily the case and that it may be possible for agencies to furlough staff if they were simply on the books waiting for an assignment for instance, as the agencies' ability to offer future assignments has been impacted by the coronavirus.
In other situations, clarification sought out by employers from employees as to whether they wanted to be furloughed, or from HMRC or other advisers, as to someone's eligibility to be furloughed, may have eventually arrived – but after the 10 June deadline had passed.
It may also be the case that some employers have heard about the Job Retention Scheme bonus or simply had a change circumstances and now wish to claim a Job Retention Scheme grant for their employees.
Please note that there is no obligation on employers to furlough workers. Decisions on whether or not to furlough employees are made by employers, in agreement with their employees and are governed by existing employment law rules. Employers do not have to claim a CJRS grant – it is up to each employer. If employers want to do this, they should contact the Job Retention Scheme helpline to discuss their exact situation and to make the backdated grant claim, if appropriate.
⚠️ IMPORTANT: Employers only have until 31 July 2020 to make any claims in respect of the period to 30 June.
What is the point of claiming a grant now?
It is not possible for your employer to retrospectively furlough you, so if your employer did not furlough you by 10 June, then it is no longer possible to do so. However, if you received a written notification from your employer to stop all work for at least 3 weeks before 10 June, and you agreed, then this might be considered a furlough period for the purposes of the Job Retention Scheme even if it didn’t use the term ‘furlough’. This means your employer can claim for a grant to help pay up to 80% of your wages – meaning you may receive a lump sum covering many weeks or even months' worth of furlough pay.
This will no doubt be very welcome if you have been trying to survive on no pay and perhaps some welfare benefits (if this is the case, you should make sure you understand how receiving a lump sum and potentially more regular furlough pay going forward, may impact on any welfare benefits you have been receiving).
Having a CVJRS claim made for you by your employer to cover a period up to 30 June 2020, means that you can also move into the new 'flexible furlough' scheme, which otherwise you would be excluded from (employers can only flexibly furlough employees that they have furloughed for a full three-week period before 30 June).
What is flexible furlough?
From 1 July 2020, employers may be able to bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim a grant for any 'usual' hours not worked ('flexible furlough').
This may benefit you if there is still no work for you to do or if your workplace has been given the green light to reopen but there isn’t a full quota of work for you to do yet. If you are not flexibly furloughed, you will only get paid for work done (if any), with no government subsidy for the time when you are not working.
I'm an agency worker, can I be flexibly furloughed?
The flexible furlough rules are more straightforward where someone works usual hours. This is often not the case for agency staff, who often do not have ‘usual’ hours. It is also the case that agency workers change assignments and so their usual hours may relate to a different assignment than the one which the person will now return to work part time.
So can agency workers be flexibly furloughed and if they can what if their usual hours relate to a different assignment that the one which they will now return to part time?
The GOV.UK guidance here is the first step, confirming that agency workers paid through PAYE can be claimed for under CJRS.
Given that they have less certainty over continuity of employment they will naturally be variable pay and variable hours workers so will need to compare the calendar year look back method and averaging method for both reference pay and usual hours.
Our understanding is that the guidance suggests that it is possible for agency workers to be flexibly furloughed, even if they are returning to a different assignment which they do not have any 'usual' hours for.
⚠️ We suggest that any employers with queries in this area, contact HMRC to discuss their specific case further.
Contact: Meredith McCammond (click here to Contact Us)
(First published: 20/07/20)