Furlough scheme extended for new parents
Parents returning to work from maternity or paternity leave after the 10 June coronavirus job retention scheme (CJRS) deadline can still be furloughed, the Treasury has confirmed.
The coronavirus job retention scheme closed for new entrants on 10 June in anticipation of the revised flexible furloughing aspect, which comes into effect from 1 July.
This cut-off date left some accountants and employers questioning the position of employees currently on maternity or other family-related leave.
But on the eve of the furlough cut-off, Chancellor Rishi Sunak announced that parents currently on leave will be unaffected by the deadline, and the employers will still be able to furlough them when they return to work.
The guidance also makes clear that the parental leave applies to people on maternity, paternity, adoption, shared parental, and parental bereavement leave (which applies in Northern Ireland only).
The only prerequisite is that their employer has previously furloughed employees and has made a claim for at least one employee. Aside from that, there isn’t a deadline.
The issue had been flagged earlier this week by AccountingWEB member Arthur Putey who queried if there was going to be a dispensation for the new parents on a long absence who otherwise would have been furloughed. “Seems unfair to have to make them redundant,” said the reader.
Until the Treasury's announcement yesterday, the consensus on the Any Answers thread feared employers would not be able to include these employees in furlough claims from 1 July 2020 to 31 October 2020, which would have left the remaining options as redundancy, unpaid leave, or getting the employee to return in some capacity.
However, payroll expert Kate Upcraft commented: "Many employers have properly furloughed people who were on family related leave anyway because employers have always been able to claim back any enhanced contractual pay under the CJRS. So surely to do that and be a relevant employee their status had to be changed to furloughed?"
The 10 June furlough deadline was announced as part of the revised furlough scheme, which enables workers to return part-time from 1 July.
However, Rishi Sunak outlined that part-time furlough is restricted to those already included in the scheme, meaning workers had to be furloughed by 10 June in order to complete a full three-week furlough period before the first iteration of CJRS closes on 30 June. From 1 July a worker can be flexibly furloughed if they have completed at least one 21 day minimum furlough period between 1 March and the 30 June 2020.
The Chancellor said: “When I announced these changes to the furlough scheme last month, I was clear that we wanted to do this in a fair way that supports people back to work as the country begins to re-open following coronavirus.
“But for parents returning from leave, their circumstances has meant that they are still in need of support, and I’m pleased that they will be able to receive the financial assistance they and their family will need.”
The story so far
Accountants and employers are looking towards 12 June when further CJRS guidance will be released, with many hoping for clarification on how the flexible furlough scheme will work in practice.
Bringing back furloughed employees part-time is just one feature of the revised CJRS which will gradually withdraw the scheme from August where employers will be expected to pay employers’ NIC and employers' workplace pension contributions.
CJRS will properly begin to taper in September when the government contributions drops from 80% to 70% of employees' reference upay and the employer will have to pick up the other 10%. Then in October, the final month, the government’s contribution decreases again to 60%, whilst the employer foots 20% of the employees' usual wages. The government has specified that employee's wages can not be reduced below 80% of reference pay at any point that a claim is being made under the scheme.
Since the guidance went live in April, the job retention scheme has supported almost nine million jobs and has been used by one million employers.