Coronavirus Job Retention Scheme: The Latest Guidance – Furlough, flexibility and fine-tuning to consider
As promised, the Government provided updated guidance on the CJRS on Friday 12 June 2020. The delivery of the detail is spread across .Gov guidance documents that have been updated, and the publishing of four new guidance documents.
Whilst the additional details are needed, the scheme is now more complex than ever. Below is a roundup of the key changes during the transition period to enable flexible furlough and the winding down of the CJRS to its conclusion on 31 October 2020. Our specialists at Square One Law can assist with queries and planning for the conclusion of the scheme.
Claim periods ending on or before 30 June – 31 July is the last day claims can be submitted for this period. The first time claims can be made for days in July will be 1 July. Claims for periods in July cannot be made before this point.
Re-cap on Flexible furlough scheme from 1 July 2020.
- Employers can bring furloughed employees back to work on a flexible, part time basis for any amount of time or shift pattern. Equality and discrimination laws will apply in the usual way when making decisions as to who will be furloughed or flexibly furloughed.
- Any working arrangement can be agreed with employees (or through a collective agreement with a trade union). However this new agreement to work flexibly (as opposed to full time furlough) must be in writing and consistent with employment, equality and discrimination law. Where a new furlough arrangement is agreed a new document should confirm this.
- The written records must be kept for five years.
- The employee does not have to provide a written response and you do not need to place all your employees on furlough.
- Employees can enter into a flexible furlough agreement more than once.
Who pays what?
- The employer will pay for the hours actually worked, whilst claiming from the scheme the remaining hours that the employee would have usually worked during that period.
- When making a claim employers will need to report hours worked against the employee’s usual hours. Ideally, the claim should be made when the exact hours are known, otherwise if an overpayment has been made, this will need to re-paid to HMRC. (HMRC will check claims and payments and pursue employers who break the CJRS rules).
- Usual hours for those with fixed hours/pay will be the number of hours worked in the pay period before 19 March 2019.
- For those with variable hours/pay it will be the higher of (a) the average number of hours worked in the tax year 2019-2020 or (b) the corresponding calendar period in the tax year 2019-2020.
- Holiday continues to accrue, can be taken and should be paid at the usual holiday pay rate, so employers may need to top up. Employers have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given.
Length of claim period and when to claim
- Flexible furlough arrangements can last any amount of time and the minimum claim period will be one week (not the current three week period). Where an employee, previously furloughed, returns to furlough in June following a period of work, this period must be for three weeks, even if it straddles June/July. The employee can then be placed on flexible furlough at the conclusion of that three week period (with the employer making separate claims in respect of June and July).
- After 1 July, employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the period up to 30 June. This is because the scheme changes on a monthly basis from July to October.
- This is the case even where an employee furloughed in June continues to be furloughed full time in July. Separate claims will need to be submitted to cover the days in June and the days in July that the employer wants to claim for, even if employees are furloughed continuously.
- Claim periods starting on or after 1 July 2020 must start and end within the same calendar month and must last at least seven days unless you’re claiming for the first few days or the last few days in a month. The employer can only claim for a period of fewer than seven days if the period they are claiming for, includes either the first or last day of the calendar month, and have already claimed for the period ending immediately before it.
- An employer can claim before, during or after they process payroll. They can usually make their claim up to 14 days before the claim period end date and do not have to wait until the end of a claim period to make the next claim.
Who is eligible?
- From 1 July 2020 employees will be eligible only where they have already been furloughed and a claim submitted to CJRS for three consecutive weeks at any time between 1 March 2020 and 30 June. New entrants, previously not claimed for through the scheme are not eligible.
- Exception – those returning from statutory leave (such as maternity, paternity leave).
Can I place more/all employees on furlough now there is flexibility?
- There is a limit on the number of employees an employer can claim for in any period as of 1 July 2020. This number cannot exceed the number of employees claimed for previously under any claim period ending 30 June 2020. The exemption being the addition of an employee returning from a period of statutory leave.
Employer contribution will be imposed from August 2020
- The current arrangements of the government paying 80% of wages up to a cap of £2,500 as well as employer NICS and pension contributions for the hours the employee does not work remains in place during June and July. During the month of July the employer will only pay for any hours that are worked.
- 1 August – The government will continue to pay 80% of wages (up to a cap of £2,500) for any hours not worked, but employers will pay all employer NICS and pension contributions payable on that sum.
- 1 September – The government will pay 70% of wages up to a cap of £2,187.50 for hours not worked. Employers will pay employer NICS and pension contributions and 10% of wages to make up 80% total, up to a cap of £2,500 for the hours the employee does not work.
- 1 October – The government will pay 60% of wages up to a cap of £1,875 for unworked hours. Employers will pay employer NICS and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500 for the hours the employee does not work.
- Employers can still choose to top up employee wages above the grant scheme, this is optional and at the employers expense.
Closure of the CJRS – 31 October 2020
- The CJRS ends on 31 October 2020, by which time employers should have a plan in place to return employees to their normal hours or, where necessary, consider alternatives such as reducing hours or making redundancies. Changes to terms and conditions or redundancies can be made ahead of 31 October 2020. The updated guidance has clarified that “normal redundancy rules apply to furloughed employees”.
- Planning – employers should consider the business needs and identify which staff will remain on furlough, and which employees are best placed to return to work (full time or part time) and get the business up to speed and prepared for the gradual reopening of the economy.
- Communication – arrangements must be agreed, either with employees or trade union confirming in writing the new flexible furlough arrangements.
- Records – employer must keep appropriate records of employee’s hours worked, furlough hours and usual hours.
- Training – employees placed on furlough can participate in training. As premises and businesses reopen there will undoubtedly be the need for training regarding the safe use of workspace, increased hygiene measures, risks and the management of the risk, as well as clearly setting out employer expectations on employee engagement.
- October – employers must plan for the conclusion of the Scheme, will employees return to normal hours, reduced hours, or will roles be at risk of redundancy.
- Risk of Redundancy – where roles become at risk, employers can consult with employees whilst on furlough. Where 20+ roles are risk, employers must collectively consult, a minimum of 30 or 45 days’. Given the timings employers should start any process/consultation as soon as possible.