Following Lisa’s recent update of 2 June (See: Coronavirus Job Retention Scheme (CJRS) – Changes around the corner), the full details were released late on 12 June and I am now able to provide additional information to cover the “Devil is in the Detail” (DITD) as Lisa mentioned. In my opinion, this new Flexible Furlough Scheme provides much needed flexibility to help employers gradually bring back their work force as work commitments increase.

On 30 June, the current furlough scheme closes which required a minimum furlough period of 3 weeks. From 1 July, the new flexible furlough scheme opens. This new scheme now has a shorter claim period of 7 days compared with 3 weeks previously and enhanced flexibility allowing employees to be furloughed with no minimum period. This helps businesses to be adaptable to change in demand and allows staff to even be furloughed down to an hour.  As always. businesses need to ensure that they have taken appropriate HR advice and need to ensure that appropriate flexible furlough agreements are in place with their employees.

I have provided a timeline of events to provide clarity over these changes and when they will take place.

10 June

  • This was the final date that you could place an employee on furlough for the first time in order that they completed a full 3 week furlough by 30 June. After 10 June it is not possible to place any employees on furlough for the first time. Consequently the scheme is then closed to new entrants.

Before 30 June

  • It is possible to furlough a previously furloughed employee after 10 June, however it must be for 3 full weeks to be able to make a furlough claim for that employee. The new flexible scheme is then available after the 3 full weeks has ended.

– For example: Mr Nobody had been previously furloughed for the whole of May 2020. He was then taken back to work until 19 June and it is the intention of the employer to Furlough Mr Nobody on 20th. This is allowed as he has previously been furloughed for 3 full weeks. However in order to claim the grant from the government, he needs to be furloughed for another 3 full weeks and cannot return to work until 11 July. From that date, the employer can access the new flexible furlough scheme which allows for part-time furlough with no minimum period. Alternatively, the employee could remain in work until 30 June and then be flexibly furloughed from 1 July.

30 June

  • The current furlough scheme closes.
  • Claims for the current furlough scheme must be submitted by 31 July.

1 July

  • Flexible furlough scheme opens from 1 July. An employee does not need to be furloughed on 30 June to be eligible for the flexible scheme. However, it is only open for an employee that had been furloughed for 3 full weeks at any time from 1 March to 30 June.
  • The amount of the CJRS grant in respect of hours not worked is on the same basis for July as it has been for the current claim with 80% of gross wages covered along with respective employers NIC and pension costs. The £2,500 gross wage cap is pro-rated to the hours in the pay period that the employee is furloughed.
  • There is a cap on the maximum number of staff that can be furloughed under the flexible scheme to be no higher than the maximum staff furloughed under the current scheme. For example: If there were 20 furloughed staff in April, 10 in May and 5 in June then no more than 20 staff can be flexibly furloughed from July on any one claim period.
  • Claims for the flexible furlough scheme can be made from 1 July. If your employee remains fully furloughed then no additional calculations will be required.
  • The CJRS grant pays for the hours that your staff are furloughed. For example if an employee is furloughed for 24 hours a week out of 40 usual hours and their normal rate of pay is £12.50 per hour then their gross pay for the week will be:

– 16 hours x £12.50 = £200 (paid by the employer)

– 24 hours x £10.00 (£12.50 at 80%) = £240.00 reimbursed by CJRS in July but reducing in later months.

– Total gross pay £440.00

  • If your employee is flexibly furloughed then the employee’s usual hours will need to be calculated and a record kept of the actual hours worked and actual hours furloughed. For fixed contractual hours these are the hours per the contract. For variable hours then the usual number of hours are calculated as the higher of either:

– the average number of hours for 2019/20 tax year.

– the corresponding pay period for 2019/20 tax year.

  • All claims under the flexible furlough scheme must start and end within the same calendar month and they must last for at least 7 days. You can only claim for a period of less than 7 days if the period includes either the first or last day of the month and you have claimed for the period ending immediately before it. For example Mr Smith is furloughed and paid weekly to the Sunday of each week. For the week ending 2 August the furlough claim will need to be split for the 5 days to 31 July and the 2 days to 2 August.
  • Claim periods should match the payroll process dates if possible and you can only make one claim for any claim period. Consequently all furloughed staff even if paid on different dates must be included on the claim for each period prepared.
  • The rate of furlough pay to the employee for each hour not worked is on the same basis as the current scheme.

31 July

  • The last date to claim for a furlough period to 30 June.

1 August

  • Flexible furlough calculations remain the same and the CJRS will continue to pay 80% of the gross wages up to a cap of £2,500. Employers will now have to pay the employers NIC and employers pension contributions. For some employers the national insurance element may be covered by the £4,000 employment allowance if it has not already been utilised in full.

1 September

  • The CJRS reduces to a claim of 70% of the gross wages up to a cap of £2,187.50 per month. Employees are still entitled to the full 80% furlough pay and so employers must make up the additional 10% plus employers NIC and employers pension as above.

1 October

  • A further reduction in the CJRS to 60% of gross wages up to a cap of £1,875 per month. The employees are still entitled to the 80% furlough pay and so employers must pay the 20% top up plus employers NIC and employer’s pension.

31 October

  • The CJRS comes to an end and I would expect the claims will need to be submitted by 30 November 2020.

If you have any questions or concerns about how the new scheme will operate, or if you need any assistance with your Payroll, please get in touch.

The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

Lambert Chapman Chartered Accountants

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