employee furlough 0

As a reminder, from 1st August, the Employer will need to start contributing more – the table below (from Gov.uk) explains – even if staff remain on furlough, and don’t do any work:

Government contribution: employer NICs and pension contributionsYesNoNoNo
Government contribution: wages80% up to £250080% up to £250070% up to £2187.5060% up to £1875
Employer contribution: employer NICs and pension contributionsNoYesYesYes
Employer contribution: wages10% up to £312.5020% up to £625
Employee receives80% up to £2500 per month80% up to £2500 per month80% up to £2500 per month80% up to £2500 per month

Flexible Furlough Scheme ‘FFS’

Flexible furlough allows staff to return to do some work on a part time basis, and remain on furlough part time. The employer pays the salary when the employee is working and you can claim from HMRC for the furlough time, within the guidelines.

Here are the main changes:

  1. Who is eligible? From 1st July 2020, an employee is eligible to be claimed for under the CJRS (Coronavirus Job Retention Scheme)  if you have previously submitted a claim for them in relation to a furlough period of at least three consecutive weeks taking place at any time between 1st March and 30th June 2020
  2. Are there any exemptions to the eligibility criteria? Yes. The 10th June 2020 cut-off date has been relaxed for those currently on statutory leave (such as maternity and paternity leave) but has not been relaxed for anyone else, even for those who are newly shielding
  3. What is the Flexible Furlough Scheme (FFS)? Under the new FFS, employees no longer need to avoid doing any work for you, they can start to work for some of the week and be furloughed for the rest. It is for you and the employee to decide the hours of work and the hours of furlough. When claiming for employees who are flexibly furloughed, you should not claim until you are sure of the exact hours they will work during the claim period because otherwise you may have to pay some of the grant back to HMRC (see point 15 below). Employees can also enter into FFS arrangements more than once
  4. How do I set the hours that my employees will work under the FFS? You will need to speak to your employees and confirm the hours of work with them in writing. You will need a new Furlough Agreement for this. If you don’t have an HR specialist, you can get in touch with our HR consultant Julie Brewster at Julie@hrsupport4u.com, who will help you with this. The employee does not need to provide a written response
  5. If I already have something in writing for my furloughed employees, do I need something new if I move them to flexible furlough? Yes. Even if you already have a written furlough agreement with your furloughed employees, if you move them to flexible furlough, you will need something new in writing that confirms the new furlough arrangement. You will need to keep a copy of this for a period of five years. If the hours of work change from that which you initially agree, you are likely to need something new in writing to cover each separate arrangement
  6. What records do I need to keep? You will need to keep records of how many hours your employees work and how many hours they are furloughed (i.e. not working). You must keep a copy of these records for six years, together with a record of the amount claimed, your claim reference number and your calculations, in case HMRC need more information about your claims
  7. Is the minimum furlough period still three weeks? No. The most significant change is that the minimum three-week period of furlough has been removed (as of 1st July 2020). This means that, from 1st July, agreed FFS arrangements can last any amount of time. That said, where a previously furloughed employee (e.g. one that was furloughed back in, say, April and has since returned to work) starts a new furlough period before 1st July, that furlough period must be for a minimum of three consecutive weeks and that can end before or after 1st July. For example, a previously furloughed employee can start a new furlough period on 22nd June which would need to continue for at least three consecutive weeks ending on or after 12th July 2020. It is only after this that the employee can be flexibly furloughed for any period. You also need to note that although flexible furlough agreements can last any amount of time, the minimum claim you can make is for one week (unless you are claiming for the first few days or the last few days in a month – see point 8 below)
  8. Is there any change to the claim periods? Yes. After 1st July, claim periods must start and end within the same calendar month and must be at least seven days unless you are claiming for the first few days or the last few days in a month. You can only claim for a period of fewer than seven days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it. The crucial point is that you cannot make claims that cross calendar months and so, in the example at point 7 above, you will need to make a separate claim for the period up to 30th June 2020. Claims for periods ending on or before 30th June 2020 must be made by 31st July 2020. The first time that you can make a claim for days in July is 1st July. You cannot claim for periods in July before this point
  9. Is there a limit on the number of employees I can furlough from 1st July? YesThe number of employees you can claim for in any claim period starting from 1st July cannot exceed the maximum number of employees you claimed for under any claim ending by 30th June 2020. For example, if you previously submitted three claims between 1st March and 30th June 2020, in which the total number of employees furloughed in each respective claim was 30, 20 and 50 employees, then the maximum number of employees that you can furlough in any single claim starting on or after 1st July would be 50. However, this may differ where you have an employee returning from statutory parental leave (see point 2 above)
  10. How do I make a claim for those in the FFS? If you decide to make use of the FFS you will, broadly speaking, from 1st July, claim a pro rata’d amount of 80% of salary, based on the proportion of hours not worked out of the employee’s normal working hours (their “usual” hours). When you calculate the usual hours, you should include any hours of leave for which they were paid their full contracted rate (such as annual leave) and any hours worked as overtime (but only if the pay for those hours was not discretionary). There are two ways to calculate an employee’s usual hours, depending on whether they have fixed or variable hours/pay:
    1. For those with fixed hours/pay, you take the number of hours worked in the pay period before 19th March 2020
    2. For those with variable hours/pay, you take the higher of (a) the average number of hours worked in the tax year 2019 to 2020 or (b) the corresponding calendar period in the tax year 2019 to 2020. If employees are paid per task or piece of work done, you should work out the usual hours for these employees in the same way as for other employees who work variable hours, if possible
  11. Can I still have people on furlough full-time? Yes. You can continue to fully furlough employees until 31st October 2020 (but note the introduction of the cost sharing regime from 1st August). These employees cannot undertake any work for you during the time that you record them as being on furlough. As before, they can, however, undertake training, or volunteer or work for another employer or organisation (if contractually allowed). If your employee is fully furloughed, you do not need to work out their usual and furloughed hours (as you do for those furloughed under the FFS). For fully furloughed people, you just need to work out the maximum wage amount
  12. Has there been any change to the holiday rules for furloughed employees? No. Employees continue to accrue leave during furlough (whether they are on full furlough or flexible furlough) and take leave during furlough (so long as you top the grant up to full pay for any days taken as holiday). You can continue to restrict when leave can be taken if there is a business need and the correct notice period is given
  13. Can I claim for employees who have TUPE transferred across after 10th June? Yes. You can claim under the CJRS in respect of employees of a previous business transferred after 10th June 2020 as long as (a) the TUPE or PAYE business succession rules apply to the change in ownership and (b) the employees being claimed for have previously had a claim submitted for them by their prior employer in relation to a furlough period of at least 3 consecutive weeks taking place between 1st March 2020 and 30th June 2020
  14. What happens when the CJRS ends on 31st October 2020? When the CJRS ends on 31st October, you must decide, depending on your circumstances, whether employees will return to their normal hours. If not, it may be necessary to consider reducing their hours or a termination of employment (redundancy). Of course, if you need to, you can make redundancies or changes to terms and conditions in advance of 31st October. The updated guidance clarifies that “normal redundancy rules apply to furloughed employees”
  15. If I get the claim information wrong, what happens? You need to be careful that the claims you make are correct. HMRC will check claims and payments may be withheld or need to be paid back if the claim is found to be (a) fraudulent or (b) based on incorrect information. The Finance Bill was amended earlier this month to enable HMRC to pursue employers who break the CJRS rules. It is reported that HMRC is expected to focus on those employers who have made employees work despite claiming the 80% furlough payments. HMRC is also expected to look out for employers that did not pass on the full furlough payment to staff, or traded profitably and didn’t need the CJRS payments. If HMRC suspects that an employer has broken the CJRS rules, it can impose a 100% tax rate on the payments. This means that HMRC can prosecute employers who fail to pay tax demands. Once the Finance Bill becomes law next month, any employer who received money from the CJRS will have 30 days to self-declare a mistaken application and pay the money back without penalty. If HMRC suspect that an undeclared mistake has been made (after considering filed accounts for the last and current financial years), it will require those suspected to show they did not break the CJRS payment rules. A failure to pay back 100% could result in criminal prosecution

Remember we are here to help and also have our HR consultant Julie Brewster (Julie@hrsupport4u.com) on hand to help with any queries you may have.

Stay safe and well

The Clear Vision Team