On 12 June 2020, the government published further updates to the official guidance on the Coronavirus Job Retention Scheme (CJRS), which includes details of how the scheme will wind down between July and October as well as how “flexible furlough” will work from 1 July.
These changes aim to continue supporting businesses during these challenging times, whilst also getting the economy back up and running, and have been welcomed by businesses as a positive alternative to the grant simply being withdrawn.
However, given the recent news that some large organisations are in talks with the government about returning furlough monies and the widespread redundancy announcements, it will be interesting to see how many employers will be utilising flexible furlough.
We set out below some key questions our clients are asking about “flexible furlough”, which may help you to decide if/how you might want to use this in your own business.
Which employees can I furlough now?
Generally, employers are no longer able to add new employees to the furlough scheme.
From 1 July 2020, employers can only furlough employees who have already been furloughed for at least 3 consecutive weeks (i.e. who started furlough by 10 June 2020 at the latest).
The only exception to this are employees returning to work from family-related leave (i.e. maternity, paternity, adoption, shared parental or parental bereavement leave) after 10 June 2020. Those employees can still be furloughed, as long as their employer has used the furlough scheme for other employees by 10 June 2020.
What will the government pay and what will I have to pay under the furlough scheme over the next few months?
The government contribution to furloughed employees’ wages and costs will reduce from August as follows:
The following quick reference guide reflects the above.
From 1 July 2020, the three-week minimum furlough period disappears and furloughed employees can switch between work and furlough as desired.How flexibly can my employees work?
For example, an employee may return to work for part of a week and be furloughed for the rest, or an employee may return to work for a period of time and then go back on furlough.
The guidance makes clear that this arrangement is entirely flexible and that working patterns and proportions of work versus furlough can be decided between the employer and employee. The only “rules” for employers are:
For example, if you previously submitted three claims in which the total number of furloughed employees was 20, 10 and 40 employees, the maximum number of employees you could furlough in any single claim starting on or after 1 July would be 40.
Of course, introducing these flexible measures is not compulsory and you can keep your employees on full furlough until the expiry of the scheme on 31 October if you wish.
How do I calculate what I can claim for employees on flexible furlough?
The calculations of the grant are extremely complex! We would, therefore, recommend that you carefully read through the guidance, which includes worked examples of how to calculate pay for a flexibly furloughed employee. The CJRS calculator has also been updated to reflect the upcoming flexibility of the scheme.
In summary, employers will need to identify the following information to calculate a claim:
This is not as straightforward as it sounds and depends on whether the employee works fixed or variable hours. However, the guidance includes some examples to assist with this.
“Usual wages” should be calculated in the same way as you have done to date and will depend on whether an employee is on a fixed salary or whether their pay varies. Please let us know if you are unclear on how to do this.
What records do I need to keep?
When using the flexible scheme, employers must keep copies of the following records for 6 years:
Do I still submit claims in the same way under the revised scheme?
There have been a few changes, so employers should be aware of the following:
Claiming for a period of fewer than 7 days is only possible when either the first or last day of the calendar month is included in the claim and the employer has already claimed for the period ending immediately before it.
If an employer claims for a CJRS grant in advance and an employee works for more hours than the employer told HMRC, the employer will have to pay some of the grant back to HMRC.
Should I use flexible furlough over the next few months and, if so, how do I go about this?
When deciding whether to use flexible furlough, employers should consider the following factors:
Is it financially beneficial to bring back some furloughed staff “flexibly” (e.g. if their contribution to the business will outweigh the wages grant you will be losing), or do you need to make them redundant before you start incurring costs in respect of them (see question 2 above)?
If you do decide/want to use flexible furlough, ensure that you do the following:
If you require any assistance in interpreting the new guidance or indeed combining the scheme with restructuring then please contact sarah.lee@bpe.co.uk or heyma.holmes@bpe.co.uk
For additional support for your business click here to access our comprehensive guidance online or follow #FutureNow on social media
Twitter: @BPE_Solicitors
LinkedIn: @BPE Solicitors LLP
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