Virgate Accounts Flexible Coronavirus Furlough Scheme Hospitality Business


As non-essential shops and hospitality venues prepare to re-open, many are facing the same difficult question:

“How can I plan my staffing levels and decide who to bring back?”

From 1 July 2020, the revised Coronavirus Job Retention Scheme (CJRS) comes into force – with subsequent changes expected in August, September and October. The updated scheme enables workers already furloughed to return to work part-time from 1 July.

This means that during the uncertain near future, hospitality and retail businesses will be able to bring back staff as and when required depending on trade.

 

Are My Staff Eligible for Part-Time Furlough?

To be eligible, workers must have been furloughed by 10 June, allowing them to have completed at least one 21 day furlough period between 1 March and 30 June 2020.

The only exception to this rule is if a worker is returning from statutory parental leave after 10 June. They can still be furloughed, even if for the first time – though other conditions may apply.

 

How Does Part-Time Furlough Work?

With flexible furlough, employees can work for some days (or part days) and be furloughed for others i.e. at work Monday and Tuesday, paid as normal, and furloughed Wednesday-Friday, supported by the government.

Any working patterns are permitted under the flexible furlough scheme and there is no restriction on how long it must last. Other key considerations include:

  • Flexible furlough arrangements must be agreed with employees in advance.
  • What employees can and cannot do on days they are furloughed remains unchanged.
  • The cap on the furlough grant will be proportional to hours not worked.
  • The three week furlough rule is being removed from 1 July, giving employers the flexibility to operate weekly rotations.

 

What Are the Alternatives to Flexible Furlough?

Flexible furlough is not mandatory. Full furlough will be available until 31 October, with additional and increasing financial contributions required of employers from August. It is possible to have some employees return to work while others remain furloughed, though these decisions can be difficult to make.

 

How Do I Make a Furlough Claim?

Any furlough scheme claims for the period prior to 30 June must be made by 31 July 2020. After 1 July 2020, claims must start and end within the same calendar month (to accommodate the scheme’s monthly changes from July-October – see below for more information).

More than one claim can be made in each month, but each claim must be for a period of at least seven days. The only exception to this rule is if claims are for a few days at the beginning or end of a month (i.e. if weekly pay is split across two months) in which case a claim must be made for each month.

From 1 July 2020 employers cannot claim for more employees in a single claim period than the maximum number of employees they claimed for in any claim before 30 June 2020.

 

How Will the Furlough Scheme Change?

  • From August 2020, 80% of wages will be supported (up to £2,500) but no employer NIC or pension costs will be covered.
  • From September 2020, 70% of wages will be supported (up to £2,187.50) but no employer NIC or pension costs will be covered.
  • From October 2020, 60% of wages will be supported (up to £1,875) but no employer NIC or pension costs will be covered.

It is worth noting that employee’s wages cannot be reduced below 80% of reference pay at any point while a claim is being made under the furlough scheme.

 

What Should I Do Now?

Before making a decision, it is important for employers to consider the following:

  • What will my staffing needs be from 1 July? How will this impact my furloughed workers?
  • If I keep my workers on full furlough, do I need to review our existing agreements? How long will I extend their furlough for? Can I afford to ‘top-up’ their salaries and make increased scheme contributions?
  • If I move my workers to the flexible furlough scheme, will I have the time needed to implement new agreements, make necessary complex calculations and meet the new record keeping requirements?
  • If I bring back only a few workers from furlough, how can I make these decisions fairly and communicate them with sufficient notice?

Navigating your way through this crisis can feel overwhelming, but you don’t have to tackle it alone. We specialise in supporting retail and hospitality businesses in situations just like these. Book a free consultation call and discover how we can help you.

 

DISCLAIMER: This article has been produced for guidance only and does not constitute advice. Copyright © 2020 Virgate Accounts. All rights reserved.

 

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