Flexible furlough - details published

As is becoming the norm the anticipated Government guidance on the new flexible furlough scheme was published late on Friday evening (12.06.20).

The details of how the scheme is to be wound down between July and October 2020 is set out in 8 different documents – some of which are updates of guidance documents we are familiar with, together with three new documents:

• Check if you can claim for wages for your employees’ wages through the Coronavirus Job Retention Scheme (CJRS) (original employer guidance document - now version 14) - UPDATED
• Check which employees you can put on furlough - UPDATED
• Claim for your employees' wages online - UPDATED
• Report employees’ wages to HMRC, using PAYE Real Time Information- UPDATED
• Long list of worked examples - UPDATED
• Flexible furlough worked example - NEW
• Calculate how much you can claim - NEW
• Steps to take before calculating your claim using the CJRS - NEW

Summary

The CJRS will end on 31 October 2020.

From 1 August 2020, the level of Government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work as follows:

• August: The Government will pay 80% of wages up to a cap of £2,500. Employers will pay Employer (ER) NICs and pension contributions.
• September: The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of
• £2,500.
• October: The Government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

From 1 July 2020 the CJRS will change and employers can bring employees back to work on a flexible basis, for any amount of time or shift pattern, while still being able to claim the CJRS grant for their normal hours not worked. However, employees must have previously been on furlough leave; employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June. It is therefore too late to put employees on furlough for first time, unless they fall into the exception in that they are returning from family leave (excluding unpaid parental leave) and were on PAYE payroll on or before 19 March 2020.

Employees will receive their normal full pay for all hours that they actually work under flexible furlough, unless there has been an agreed change in the employment contract as to their pay. Employers will pay this element themselves in full. Employers will be able to claim the CJRS grant for the hours employees are not working when they would normally do so. The grant and cap will be reduced in proportion to the hours not worked. For example, an employee is entitled to 50% of the £2,500 cap if they are furloughed for 50% of their usual hours.

Key Points:

Options available for employers regarding furloughed staff

There are now various options available to employers under the CJRS to manage their workforce:

• Employees who are currently on furlough (i.e. you have previously submitted a claim for them in relation to a furlough period of at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June) can remain on furlough full time for any period up until the scheme closes at the end of October – although you will need to check you have their agreement to cover the full furlough period. So for those such as shielding employees, those caring for others etc, the status quo is maintained albeit the amount employers can recover under the CJRS will change as the scheme changes from 1 August onwards.
• You can put people back onto furlough now where they have been previously furloughed.
• However, if an employee starts a new furlough period before 1 July this furlough period must be for a minimum of 3 consecutive weeks. The minimum period will change after 1 July (see below).
• Employees can be on rotation between periods of furlough and full time work (from 1 July you will not be required to operate a 3-week minimum rotation – see below).
• You can end furlough for some employees and bring them back to their previous normal hours at work, while other employees remain on furlough.
• From 1 July you could also flexibly furlough employees where employees will be able to work part-time and be on part-time furlough. This means you can bring employees back from furlough to work for any amount of time, on any work pattern (this can change from week to week) and still be able to claim the CJRS grant for the hours employees do not work, compared to the hours they would normally have worked in that period.

Minimum furlough period

Until 1 July, employees must be furloughed for a minimum of 3 consecutive weeks. Furlough periods which begin after 10 June but before 1 July must be for a minimum of 3 weeks even if that minimum period ends after 1 July.

From 1 July there is no minimum number of weeks or days that an employee must be on furlough (but note claim period below).

Claim period

Employers have until 31 July to make any claims in respect of the period to 30 June.

From 1 July onwards, the claim periods must start and end within the same calendar month.

The claim period must last at least 7 days unless you are claiming for the first few days or the last few days in a month. You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it. For example, an employer putting an employee on furlough on 15 June for three weeks is unable to make one claim for furlough. The employer would have to make one claim, for 16 days, for the June furlough and then another claim for the 5 days in July.

What is the maximum number of employees employers can claim for?

Under the revised scheme there is a cap on the number of employees who can be furloughed and claimed for at any one time. From 1st July 2020, the number of employees you can claim for in any claim period cannot exceed the maximum number of employees you claimed for under any one claim before 30 June. There is an exception where you have an employee returning from family leave (other than unpaid parental leave).

By way of example, if you have been rotating your employees on furlough - with half of the workforce furloughed for three weeks then they come back to work and the other half are furloughed for three weeks. In that circumstance you have only ever claimed for half your employees at a time (say 30), whilst the other half are at work . You will not be able to make a claim for more than 15 employees at a time from 1 July, because the highest number of employees you have claimed for in previous claims is 15.

What do employers need to do if they want to put in place flexible furlough?

Agreeing a flexible furlough pattern with employees will need to be documented in writing to confirm the arrangements. The agreement will need to cover the hours they will be working and the hours they will be furloughed. The Guidance says the written agreement has to be kept for five years. It is not fully clear whether the agreement to flexible furlough needs to be full written agreement with employees as opposed to written confirmation / letter as has been applicable for full furlough – it would seem odd if the position had changed for flexible furlough but we also await an update to the Treasury Direction for CJRS which may shed more light on this point.

In terms of the claim under the CJRS, you will need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours (i.e. not working) in each claim period. This information must be kept by the employer for a minimum of six years (note that this is one year more than the requirement to keep the written agreement).

There are different calculations you can use to work out your employee’s usual hours, depending on whether they work fixed or variable hours. For those on fixed hours this is quite straightforward but for those employers with a workface on variable hours this process will be more complex. The Government have set out the process in the Guidance (Steps to take before calculating your claim using the CJRS - NEW) and have provided various worked examples to assist: (Flexible furlough worked example - NEW; Long list of worked examples - UPDATED)