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16 JUN 2020

FLEXIBLE FURLOUGH: WHAT YOUR BUSINESS NEEDS TO KNOW

Wendy Lasebikan provides an update on the expanded Coronavirus Job Retention Scheme.

F

ollowing the Chancellor’s announcement on 29 May regarding further changes to the Coronavirus Job Retention Scheme, we now have more detailed guidance, issued on 12 June, about the new flexibility and how the scheme will operate from 1 July 2020.

As announced on 29 May, employers will be able to continue to claim under the scheme on a tapered basis between July and October; and they will be able to bring furloughed employees back to work on a part time basis from 1 July 2020, while still being able to claim for hours not worked.  Employers will be responsible for paying their workers’ wages in full while they are in work, including paying the tax and employer National Insurance Contributions due.   

The 12 June guidance now clarifies that to be eligible for furlough from July, the employee needs to have been furloughed for at least three consecutive weeks between 1 March and 30 June.

The minimum claim period is also changing to seven calendar days.

Employers will now also face a cap on the number of claims they can make after 1 July, limited by the maximum number of claims made in any single instance between 1 March and 30  June.

Furloughing employees on part-time basis raises the question of what constitutes an employee’s ‘usual hours’? The 12 June guidance states that the usual hours of employees who work variable hours should be calculated by using the wages from the corresponding calendar period last year or the employee’s average wage for the 2019-20 tax year, whichever is higher. For employees on a fixed salary, their usual pay is to be taken from their last pay period before 19 March 2020.

Where a previously furloughed employee starts a new furlough period before 1 July, this furlough period must last for a minimum of 3 weeks even if this means it will end after 1 July. For employers that have a rotational furlough system in place, if a group of employees furloughed before 1 July would have to remain fully furloughed for three weeks before they can then be put onto a flexible furlough arrangement.

How to claim under the flexible furlough

Employers will have until 31 July to make any claims in respect of the period on or before 30 June.

Employers must claims separately for grants for the periods covering up to 30 June and from 1 July.

From 1 July onwards, claims must start and end within the same calendar month and cannot overlap different calendar months. This is because the scheme rules will change each month from 1 July with the changing levels of employer contribution.  

These claims must be made separately even where an employer continues to be furloughed full time in July.

The number of workers an employer can claim for in any single claim from 1 July cannot exceed the maximum number of workers the employer has claimed for up to 30 June.  For example, if an employer had previously submitted three claims between March and June, in which the total number staff furloughed were 30, 20 and 50 employees respectively, then the maximum number an employer can furlough in a single claim will be 50. The only exemptions are for employees returning from parental leave for whom the eligibility criteria and claim caps may not apply. This means that employers who are operating rotating furloughs will not be able to put all previously furloughed employees on flexible furlough at the same time.

If an employer makes an error in a claim resulting in overpayment, they must pay this back to HMRC. Employers can tell HMRC about any overclaimed amount as part of their next claim (and should keep a record of the adjustment for six years). HMRC are looking at a process for paying back overpayments where no future claim is to be made. If there was an underpayment, the employer has to contact HMRC to amend the claim and HMRC will undertake additional checks.

Replay the Navigating COVID-19 webinar on flexible furlough with legal affiliate Beale & Co.

Explore the latest COVID-19 business advice in our hub. Wendy Lasebikan is HR Director at ACE and provides the secretariat to the HR Taskforce.

The details above will be added to our guidance note soon.

Wendy Lasebikan

Wendy Lasebikan

Director of Compliance, HR and Corporate Services

Wendy is in charge of all things HR at ACE and leads the legal team.

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Guidance: Coronavirus Employment Schemes

16 June 2020

Full guidance note on the Coronavirus Job Retention Scheme and sister scheme for the self-employed.

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