Last week, Chancellor Rishi Sunak extended the Job Retention Furlough Scheme, which was initially expected to end on 30 June 2020 until the end of October 2020. However, starting in August, there will be another welcome change to the scheme that addresses what it means to be a furloughed employee.
Up until this point, if a business put their employee on the Governments furlough scheme, the set employee was unable to do any official work for the business. There was even a dedicated hotline introduced to notify HMRC if someone is being asked to work while being on furlough.
This quickly led to a spike in Google searches asking whether an employee can volunteer while on furlough. With all the benefits of the CJRS, there are a few fundamental flaws. First, it seems counterproductive for the business to have an employee simply do nothing while being financially supported. Secondly, there are psychological and wellbeing implications when an employee is on furlough.
From an employer’s perspective
From a business perspective, it is great to be able to retain your workforce and minimise the number of people you have to let go. Any successful business requires good talent, and to find this talent can be a long, tiresome and costly process. Therefore, being able to support your employees during Coronavirus without having to let them go is welcome both for the business and the employee. On the flip side, by furloughing your employee, they can almost be considered as laid off from the perspective of getting any work out of them while the scheme is active.
Moreover, your employee can volunteer, but not for you, which is a stingy point. The Government’s position on getting your employees to volunteer is pretty strict, which in summary means there shall be no activity undertaken by a furloughed employee on behalf of a business that can generate revenue or offer a service. Thus, leaving very little room for an employee to do any real and meaningful work for the business. It seems pretty clear the drawback it has for the business itself but what about the employee?
What about the employee?
When the lockdown was first initiated many may have felt fearful and unsure whether the situation of working from home will work. Although, and correct us if we are wrong, shortly many may have become aware of the benefits of working from home. No more sweaty commutes. No more queues. No more early train journeys. More time to spend with our loved ones.
However, as the honeymoon period wore off, you may have found yourself scrolling through Netflix or your streaming platform of choice only to find yourself repeating, “seen this”, “saw this too”, “and this…” etc. Now imagine those employees that are on furlough, those who don’t have a job to keep them busy at home during lockdown?
It is hard to deny that Coronavirus has caused mental health issues across the globe, people have felt isolated, scared of getting infected, afraid for their jobs, all of which have led to growing cases of anxiety and depression. The Guardian shares a disturbing quote of a woman who rang the NHS service because her partner “was walking around their house like a zombie because he wasn’t working and couldn’t provide for the family and had just snapped”.
Although the way the woman’s partner was acting should not be taken as a direct symptom of the furlough scheme, it is important to highlight that without work or something to occupy a person’s time, mental health issues can both arise and be exasperated. There is a direct link between unemployment and mental health issues, and Very Well Mind highlights several reasons why that is the case:
- Difficulty paying for basic necessities and bills
- Lack of purpose, such as being unable to contribute to society or provide for your household.
- Reduced social interaction, which can exasperate the feeling of loneliness
For this reason, the changes that are due to take place in August are promising to the business, the taxpayers and the employees. Starting in August, employers will be able to bring their furloughed employees back to work on a part-time basis, instead of being forced to stay at home. By introducing the ability to bring workers back on a part time basis, it also allows businesses to pick up speed and return to similar levels of output as before the pandemic.
What do the changes coming in August mean for the business owner?
Although the details of the scheme are still being worked out and more information will be available at the end of May, Chancellor Rishi Sunak is aiming to cut the cost of Treasure contribution from the current 80 percent of wages to 60 percent. This means that the business will need to meet the difference of their furloughed workers’ minimum salary payments, either 80 percent of their pay or £2,500 per month.
Other details that are considered are clarifications regarding overtime payments and how to calculate it for furloughed employees. In addition, it seems that there is a need for the employee to have been on furlough at the end of July in order to be furloughed over August to October. Therefore, employers need to evaluate whether they will still require CJRS support until October and if so, consider the next steps to ensure that the employees in question can be put on furlough when the scheme is updated.
Practical Steps for Business Owners
- Bringing people back to work: what staff will you require between August – October, is it the same as currently on furlough? Can you bring that staff back on a full or part time basis? Will you be able to provide your workers with discretionary payments, you may need to discuss the implications of this with your furloughed workers.
- The claim process: you most likely will need to revisit JRS claims to consider issues like overtime
- Review current agreements with employees: will you need to put different employees on the furlough scheme or extend the furlough agreement?
You can learn more about the Coronavirus Job Retention Scheme and how we can help you with the calculation, here.