From 1 July, employers can start to bring furloughed staff back to work on a part time basis should they wish, with the CJR scheme ultimately drawing to an end by October of this year.
HMRC have now issued updated guidance about how the furlough scheme will work in practice in light of this flexibility announced by the Chancellor at the end of May. So what’s changed?
‘New’ Furlough Scheme
In essence, there will be a ‘new’ furlough scheme in place for furlough periods starting from 1 July 2020.
For those employees on existing furlough at this date, then their period of furlough is deemed to have come to an end on 30 June and a ‘new’ period of furlough starting from 1 July. Two separate furlough claims will be required here; one to include furlough days up to and including June 2020 to be included in the ‘June’ claim, with the new furlough claim commencing on 1 July. You can find examples of this here. Claims for periods up to and including 30 June must be submitted prior to claims under the ‘new’ scheme.
As with the existing scheme, claim cannot be made more than 14 days prior to the end date of the period of the claim, for example, a claim under the scheme for a furloughed employee up to 31 July cannot be made until 18 July.
Claims cannot span over different calendar months
From 1 July, claims must start and end within the same calendar month, except where 6 days or fewer within the claim period relate to the previous month. This will have implications for four-weekly payrolls, who will have to make fortnightly claims to stay within the same month
Claim periods cannot be shorter than a week.
Any claim for a period in a calendar month must now be submitted before the end of the following calendar month but further clarification is awaited here.
Who can be claimed for?
Only employees who have been furloughed for a minimum of 21 days at any point between the period 1 March to 30 June can be claimed for under the ‘new’ scheme. The exception to this is those employees returning from certain parental or bereavement leave.
Length of furlough period
The minimum furlough period previously was 21 days, which could be extended by any length of time up to the scheme end. Any return to furlough after a break up to 30 June must be for a minimum of 21 days, should that happen to fall across June and July, then the claim must be split into two, as above. The 21 day period need not be the last 21 working days in June. Under the new scheme, there is no minimum period.
How many employees can be claimed for?
Numbers must not exceed the highest number of employees that were previously claimed up to and including 30 June 2020. This could be particularly relevant where employers have been ‘revolving’ furloughed employees in teams as this could have an affect on the ‘maximum’ number of employees, depending upon how furlough claims were structured and timed. Exceptions to this include:
1. Employees returning from certain parental or bereavement leave, as above
2. Employees who have been TUPE’d into the business after an acquisition or compulsory liquidation after 10 June who had also previously been furloughed under their previous PAYE scheme between 1 March and 30 June 2020
3. Employees who have been moved to a new PAYE scheme as a result of business reorganisation who had also previously been furloughed under their previous PAYE scheme between 1 March and 30 June 2020
The new scheme introduces the flexibility to allow employers to furlough their staff within the same pay period and even on the same day. To do this, employers will have to calculate all of the following:
- The employees’ usual hours (see below)
- Actual hours worked
- Furloughed hours worked
Usual hours are either:
- Contracted hours for salaried employees, or
- Specific formula for zero hours or variably paid employees. In either case hours should be rounded up to a whole hour.
To calculate furloughed hours, actual hours worked should be deducted from the usual hours. Both usual hours and actual hours will need to be reported in the CJRS claims portal (unless employee numbers exceed 100, when information can be submitted via spreadsheet).
Itemised payslips that specify number of hours worked have been required since April of last year, where an employees’ pay varies based on the hours worked. This requirement will now extend to all flexibly furloughed employees from 1 July. Employers can choose to show furloughed hours on itemised payslips if they wish.
The wage cap
This remains at £2,500 for July and August, prorated to hours in the pay period during which the employee is furloughed, based on calendar days. National insurance contributions and pension threshold will also be apportioned.
National Minimum Wage
Employers should ensure that any employees and apprentices receive at least the National Minimum Wage during flexible furlough for both work and training.
Amendments – Overpayments & Underpayments
Where overpayments have occurred, these can be repaid by deducting the amount from the future grant. A record of this adjustment should be retained for a period of 6 years.
Further information is expected for the repayment mechanism where overpayments have occurred but no future claim under the scheme is to be made.
Underpayments should be notified to HMRC, who are expected to conduct additional verification checks.
The changes at a glance
Employers should remember to retain written employee agreement to any existing and new flexible furloughing arrangements until 30 June 2025.