04 Jan Returning Employees from Furlough: What It Means for Your Payroll
The on-going COVID-19 pandemic has been absolutely devastating to businesses and people across the UK, with hundreds of jobs lost and companies that have gone into liquidation. In order to support them, the government has introduced various financial help schemes.
One of these is the Coronavirus Job Retention Scheme (CJRS), more commonly called the Furlough Scheme, which has been recently extended until the end of April 2021.
Thousands of employees have been furloughed for months now but as they will be gradually returning to their workplaces, businesses need to start preparing for it. This article will outline everything you need to know about the Furlough Scheme and what the end of it means for your payroll.
What is the Furlough Scheme and how does it work?
The Furlough Scheme was introduced by the government back in March 2020 and will last until the end of April 2021. The purpose of this scheme is to help out businesses that have been affected by Coronavirus and protect their workers’ jobs by covering most of their wages.
The CJRS currently covers 80% of wages (with a maximum of £2,500 per month per employee) for employees that are unable to work due to the Coronavirus. The scheme will, however, be reviewed in January 2021 and the government contribution may be reduced based on the economic circumstances at the time.
As an employer, you are only asked to cover the National Insurance and the employer pension contributions, which account for around 5% of total employment costs. You are also free to cover the remaining 20% of your employees’ wages but that is optional.
Flexible Furlough has taken effect from 10 June 2020 and allowed furloughed employees to work for some of the week and still get part of their salaries covered by the government. This meant that more employees became eligible for the CJRS and they now don’t have to avoid any work for their employer in order to be furloughed. The hours they work are decided between themselves and the employer.
Furlough claim period
If you have furloughed employees due to Coronavirus, you’ll need to claim their wages. The claims must be submitted by midnight 14 calendar days after the month you are claiming for. The exact dates are as follows:
Claim for furlough days in
Claim must be submitted by
14th of December 2020
14th of January 2021
15th of February 2021
15th of March 2021
14th of April 2021
Who is eligible for Furlough?
All employees that have been employed on 30 October 2020 are eligible for the furlough scheme as long as their employer made a PAYE RTI submission to HMRC for them between 20 March 2020 and 30 October 2020.
This includes any type of employees: full-time, part-time, contracted employees from agencies or zero-hour contract workers. It also covers businesses of all sizes, charities and recruitment agencies.
Keep in mind, though, that you need to get your employees’ agreement in order to put them under the furlough scheme. They must be consulted about the change of their employment status due to no work or less work available as the change is subject to the employment laws.
People that left their job or were made redundant after 23rd September 2020
If an employer decides to re-employ someone that has been made redundant or stopped working on or after the 23rd of September 2020, they can still put them on the furlough scheme. In this case, the employee must have been on the employer’s payroll on 23 September and included in the RTI submission to HMRC between 20 March and 23 September.
Employees who have more than one job
Each of your employee’s jobs are treated separately for the purpose of furlough. This means that they can be furloughed for the work they do for you and continue working for other jobs. They can also be furloughed for each job separately.
Can employees on furlough take holiday?
Furloughed employees are entitled to statutory holiday and any additional holiday provided under their employment contract. Taking a holiday will not disrupt your workers’ furlough and the notice requirements for the workers to take leave or to refuse a request for leave continue to apply as normal.
To find out what your employees’ statutory holiday entitlement is, use the government holiday entitlement calculator.
What happens after the Furlough ends
Employers should regularly review whether their furloughed employees could be put on flexible furlough or return to work full time. They need to consider which workers are currently more needed back at the workplace, how many are needed and whether to bring them back based on their individual situations (e.g. if one of your employees is caring for a vulnerable person and is unable to work).
How much notice do employers need to give employees they are bringing back?
There is no minimum notice period before you bring your employees back from being furloughed. However, you are required to discuss and agree this with your employees as early as possible. It’s also important that your employees raise any concerns about returning to their workplace.
The notice to your staff before their return to work needs to be in writing. You can use a letter template to end furlough.
Who can return to work and with what pay?
Any of your furloughed employees can return to work assuming that you and your staff have reached an agreement. You also must ensure that your workplace follows all government safety guidelines before you bring them back.
Your staff can be moved in and out of the furlough scheme until the end of April 2021, so your workers will be able to go back on furlough again, if needed.
Once your employees are back on your payroll, they must receive their full normal pay for any hours they work.
Does HMRC need to be informed when individuals come off furlough?
The short answer is no. Businesses only need to inform HMRC about employees that are on the furlough or the flexible furlough but there is no need to advise a return to work.
Communicating with your returning staff
It is crucial that you regularly communicate with your staff whether they are on furlough or returning from it. Your team’s health and safety should be your top priority, so taking the necessary practical measures to ensure that is key. Your employees also need to be fully aware of the safety rules, procedures and social distancing guidelines before returning to your workplace.
What if someone refuses to return to work?
Many employers are currently grappling the issue of whether furloughed employees have the rights to refuse returning to work. This could be because they are scared of catching Coronavirus and they do not believe your workplace is a safe environment for them.
According to employment laws, your employees are obligated to do what’s reasonable depending on their individual situation. However, it is under your worker’s subjective perception whether they believe that returning to work will pose them any danger.
As an employer you should be very cautious with any dismissal actions during Coronavirus since the laws are likely to swing in the favour of employees. Instead, the employer should look for alternatives and consider each individual case.
You should be proactive in communicating with your employees and understand the concerns and issues they have about returning to your workplace. Try and reach an agreement with them: can they possibly work from home? Could they be placed in a different role within the organisation where they would feel more safe?
Support available after the Furlough Scheme ends
The currently available Coronavirus support schemes were supposed to end in January 2021 but now are extended until the end of April 2021. These include the government’s Coronavirus loans, such as the Bounce Back Loan and the Coronavirus Business Interruption Loans.
As for the further support available after the CJRS ends, the Chancellor has confirmed that the Budget will take place on 3rd March 2021, which is when the further action plan to support businesses and protect jobs will be announced. Saying that, this could happen earlier depending on how the economic situation changes in the next few months.
Do you need support with your payroll?
Payroll can be a hugely time-consuming process for businesses with larger numbers of employees. If you’re worried about managing your payroll once your staff returns to work, why not outsource it to professionals?
Here at ASfB, we offer paperless payroll services to businesses of all sizes - whether you have just a few employees or a thousand, we’ll manage your payroll in the most efficient and smart way. We will take care of all enquiries with HMRC for you, including the NI payments and employer’s pension contributions.
We will also produce any documents you may require, including ePayslips on your selected time periods, form P60 at the year end and form P45 for the leaving employees.
Payroll outsourcing means that we will efficiently handle everything for you while you stay focused on what’s really important - running a successful business.
Get in touch with us by calling on 01202 755600 or dropping an email to firstname.lastname@example.org.