Flexible Furlough Scheme Explained
From 1 July 2020 there will be substantial changes to the Coronavirus Job Retention Scheme in the UK.
What is the New Flexible Scheme?
Originally, an employee had to be furloughed for a minimum of 3 weeks and they were not allowed to do any work for their employer. But from 1 July, staff can return to work part time, for any amount of time and any shift pattern, while still being allowed to claim CJRS grant for the hours they’ve not worked. This is the first step taken by the UK Government in tapering down the CJRS, before its planned closure on 31 October 2020.
There are no changes to the level of grant in June, but the minimum three week period for an employee to be furloughed will be removed from 1 July 2020.
Any claim made through the CJRS portal must be for a minimum one week period, so employers can only put in four claims a month. Employers will claim a pro rata amount of 80% of that employee’s salary. This is based on the proportion of hours they didn’t work outside of normal working hours. Any hours worked must be paid at the contractually agreed rate.
In addition, the claim periods for the new flexible scheme are limited. Any claim for the period before 30 June must be made by the employer before 31 July and any claim for a period after 1 July must start and end with the same calendar month.
This means that periods of furlough cannot overlap months.
To be eligible for the new flexible scheme, an employee must have been furloughed for a minimum of 3 weeks before 1 July 2020. That means they must have been put on furlough on or before 10 June 2020.
The revised scheme does not cover any new starters who started work after 19 March 2020, but, an exception is made for anyone returning from statutory parental leave and maternity leave after 10 June, as long as:
- They were on the PAYE payroll on or before 19 March 2020;
- They started their leave before 10 June; and
- Their employer has previously submitted a furlough claim for any other employee
Amendments to the Agreement
On the original scheme, staff were not allowed to work for their employers whilst on furlough. The agreement between employer and employee should stop anyone carrying out any work for the employer whilst being furloughed.
If your employer wants to use the flexible furlough scheme, they will need to amend or issue a new agreement with anyone they want to bring back to work on a part time basis.
Record Keeping Requirements
In addition to retaining the furlough agreement, which should set out the basis which the employee agrees to flexible furlough, for a period of 5 years for each employee, employers must also keep a copy of all records for 6 years, including:
- The claim reference number
- The amount claimed and the relevant claim period for each employee
- Hours worked for each employee claimed for
- Usual hours worked and the number of hours each employee was furloughed
- All calculations used by the employer
Month by Month Changes to the Scheme
For June and July, the Government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions and pension contributions for the hours the employee is on furlough. Employers have to pay employees for the hours they work.
From 1 August 2020, the level of grant will be reduced each month. To be eligible for the grant, employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.
- The Government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough
- Employers will pay ER NICs and pension contributions for the hours the employee is on furlough
- The Government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough
- Employers will pay ER NICs and pension contributions and top up employees’ wages to make sure they receive 80% of their wages, up to a cap of £2,500, for time they are furloughed
- The Government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough
- Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages, up to a cap of £2,500, for time they are furloughed
Employers can still choose to top up their staffs wages above the 80% total and £2,500 cap for the hours not worked at their own expense. Employers still have to pay their employees for the hours worked.
The Government has published useful guidance on steps to take before calculating your claim, including how to work out your employee’s usual and furlough hours – this can be found here and you can read the new guidance published by the Government about the CJRS on 12 June 2020 here.
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