Jack Boyle: Another change to the job retention scheme

Jack Boyle

Jack Boyle, director and specialist in employment law at Blackadders, details the latest changes to the UK Government’s Job Retention Scheme.

Following on from Rishi Sunak’s latest announcement about changes to the Coronavirus Job Retention Scheme (“CJRS”), HMRC has updated its guidance on how the furlough arrangements are to work from 1 July 2020 onwards.

Employees can perform work from 1 July

One of the fundamental aspects of the CJRS as we knew it was the requirement that a furloughed employee could do no work for their employer. That aspect is to be removed under FFS, allowing employers and employees to agree splitting up their working time between time spent working, and time spent on furlough. Employers should agree to the arrangements with employees in writing. It remains to be seen whether variation letters to initial furlough agreements will suffice – a safer approach might be to issue new furlough agreements detailing the flexible arrangements.

No minimum duration

The flexible furlough scheme (“FFS”) will operate a less rigid approach to furlough arrangements. In particular, the minimum 3 week duration for a period of furlough has been removed. There will be no minimum duration for a furlough (from 1 July), although employers may only make claims to the CJRS in respect of, as a minimum, a one week block. FFS is purely voluntary. Full furlough remains an option for employers. The updated guidance reminds employers not to submit their claims to the CJRS until they know with certainty what hours the employee will actually spend working in the claim period.

Which employees you can furlough from 1 July?

The CJRS is closed to new entrants from 30 June. This means that any employee who spent time on furlough from the commencement of the CJRS to 10 June can be furloughed from 1 July. Last orders were called on 10 June, meaning that if an employer furloughed someone on or before 10 June, and they spent at least 3 weeks on furlough, then they are also eligible for future furloughing under the FFS. There is also an exemption for those returning from maternity, shared parental, paternity or parental bereavement leave after 10 June. Such a person can be furloughed, provided the employer has furloughed at least one other employee in the aforementioned timeframe.

What can employers claim under FFS from 1 July?

Where an employee is back doing some work, and on furlough for the remaining part of their normal working time, employers can claim to the CJRS for the pro-rata proportion of 80% salary for the time spent not working. Note that the cap on CJRS claims, £2500, is applied proportionate to time spent on furlough. If an employee spends 60% of their time on furlough, the employer can claim 60% of the £2500 in respect of that employee. Here are some worked examples from HMRC on calculating flexible furlough.

What to pay the employee for time spent at work?

The employee is entitled to be paid their normal remuneration for any time which they spend working during a flexible furlough arrangement.

Maximum number of claims from 1 July

Employers intending to use the FFS to spread the furlough leave across their entire workforce will need to think carefully. That is because there is a maximum on the number of employees for which an employer can claim in a claim period. That maximum is the same as the highest number of employees for which an employer claimed in any claim period prior to 30 June.

Remember the scheme is tapering

When making calculations under FFS arrangements, bear in mind that the amounts claimable under CJRS are to change. July is the last month where employers can claim 80% of pay plus employer’s NICs and minimum auto enrolment pension contributions. From 1 August, employers will have to pay the employer NICs and pension contributions themselves. From 1 September, the 80% becomes 70% (meaning employers have to pay the difference, in addition to the NIC and pension contributions). In October, the final month of the scheme, the government contribution dips to 60% (again with employers having to pay the difference to make up the 80%).

Record keeping

Employers must remember to keep records of their furlough claims and calculations for 6 years. In respect of FFS, this means keeping records of: –

  • The amount claimed and the claim period for each employee
  • The claim reference number
  • Your calculation of the figures claimed
  • Usual working hours (including calculations used to reach these)
  • Actual working hours for employees flexibly furloughed.
  • Read all of our articles relating to COVID-19 here.

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