New Flexible Furlough Scheme – An Overview

New Flexible Furlough Scheme – An Overview

The new flexible furlough scheme is coming into force on 1^st July, accompanied by new government guidance and changes to the old one. Employers can now furlough employees on a part-time basis, meaning they can work for some days of the week and be furloughed for others. Employers will then be able to claim the Coronavirus Job Retention Scheme (CJRS) grant for any hours not worked.

1. Who will be eligible?

Only employees who have been furloughed previously and for whom the employer claimed successfully are eligible. They will have to have been furloughed for at least three weeks on or before 30^th June, meaning it is no longer possible to furlough new employees.

The exceptions are employees returning from statutory parental leave, including maternity, paternity, shared parental, adoption or parental bereavement leave.

2. Duration of Furlough

Furlough period (length of time for which an employee is furloughed)

Until 1^st July, the minimum furlough period is three consecutive weeks for all furlough periods started in June, even those ending after the 1^st July.

From 1^st July onwards, there is no longer a minimum furlough period.

Claim period (number of days for which the employer is claiming a grant under the CJRS)

While there is no minimum furlough period under the new scheme, the minimum claim period that employers can claim for is seven calendar days.

After 1^st July, employers will no longer be able to submit claims that cross calendar months so furlough periods falling across two months must be claimed for separately. This is because the rules on employer contributions are changing each month (see below). Furthermore, employers can only make one claim for each period and must therefore include all furloughed/flexibly furloughed employees in one claim.

Note that you must submit any claims under the old scheme by 31^st July.

3. Calculation of furlough grant

If your staff are not returning to work, your pay calculations do not change. However, your contribution will increase from 1^st August onwards.

	July	August	September	October
Government contribution: employer NICs and pension contributions	Yes	No	No	No
Government contribution: wages	80% up to £2,500	80% up to £2,500	70% up to £2,187.50	60% up to £1,875
Employer contribution: employer NICs and pension contributions	No	Yes	Yes	Yes
Employer contribution: wages	–	–	10% up to £312.50	20% up to £625
Employee receives	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month

The new scheme enables employees to work as many hours as agreed with the employer. The latter will then be able to claim a furlough grant for the hours the employee does not work.

Employees on fixed hours: Employers will need their “usual hours”, based on the hours the were contracted to work at the end of the last pay period ending on or before 19^th March, and subtract the hours they actually worked while flexibly furloughed.

Employees on variable hours: Employers will need their “usual hours”, based on the higher of the average number of hours worked in the tax year 2019 to 2020, or the corresponding calendar period in the tax year 2019 to 2020 (including periods of paid annual leave/non-discretionary overtime), and subtract the hours they actually worked while flexibly furloughed.

The government guidance includes steps to take before calculating your claim and a worked example.

4. Written Agreement

Employers will need a new written agreement with their employees to confirm the new furlough arrangements. For record keeping purposes (see below), we would advise employers to specifically seek signed confirmation of the hours agreed upon.

5. Record keeping

You will need to keep a copy of all records, including:

• the amount claimed and claim period for each employee
• the claim reference number
• your calculations
• for employees who are flexibly furloughed, their usual hours including any calculations and the actual number of hours they have worked

6. Mistakes happen

Considering the complexity of the new scheme, the government has now included a section in their guidance on claiming wages, acknowledging this. When making your claim, you will be asked whether you need to adjust the amount down to take into account a previous mistake. Seeing that any overclaimed amount must be paid back to HMRC, we would advise to keep a record of this adjustment. If you are not submitting further claims or if you underclaimed previously, you will have to contact HMRC directly.

If your business is looking for assistance in navigating the new guidance or advice on the redundancy process, our expert lawyers are here to guide you through the changing landscape. Call us on 0207 388 1658, or email info@jfhlaw.co.uk.

Useful Guidance:

Guidance 1

Guidance 2

Guidance 3

Guidance 4

Please note that the information contained in this article was correct at the time of writing. There may have been updates to the law since the article was written which may affect the information and advice given therein.