Flexible Furlough Scheme

On Friday (29 May 2020), chancellor Rishi Sunak announced the long-awaited detail on his plans to wind down the furlough scheme by October. This included detail on the creation of new flexibilities allowing employees to work part time while still being eligible for furlough grants, and the introduction of employer contributions.  Below are details of the details.

Employer costs

  • In June and July 2020, the government’s contribution to the wages of furloughed employees under CJRS will continue unchanged, i.e. with HMRC paying 80% of wages up to a cap of £2,500 with no contributions from the employer and HMRC reimbursing employer NICs and minimum employer pension contributions.
  • In August 2020, HMRC will provide the lower of 80% of wages or £2,500 per month but employers will not be able to reclaim employer NICs and minimum pension contributions.
  • In September 2020, HMRC will pay 70% of wages up to a cap of £2,187.50 with employers being required to pay 10% of wages to make up 80% total up to a cap of £2,500 and employers will not be able to reclaim employer’s NICs and minimum pension contributions.
  • In October 2020, HMRC will pay 60% of wages up to a cap of £1,875 with employers being required to pay 20% of wages to make up 80% total up to a cap of £2,500 and employers will not be able to reclaim employer’s NICs and minimum pension contributions.
  • On 31 October 2020, the CJRS will close altogether.
  • As with the previous scheme, the employer can choose to top up the payment if they want to.

Closure of CJRS to new entrants

  • The CJRS will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.
  • This means that there is a final deadline of 10th June to furlough employees who have not previously been furloughed, to qualify for the new CJRS scheme that starts on 1 July 2020.
  • From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed for a minimum of three weeks.
  • Employers have until 31st July 2020 to claim for furloughed employees under the old scheme up to 30 June 2020.

Flexible furloughing

  • From 1 July, employers can bring back to work employees that have previously been furloughed for three weeks or more, for any amount of time and any shift pattern, while still being able to claim CJRS grant for those contracted hours/days that they are not required to work, i.e. employers will be allowed to furlough employees for only part of their working week, for example working two days a week and on furlough for the other three days.  The employer will be responsible all the costs associated with the hours/days the employee works
  • The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS.
  • When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week. This is a minimum period and those making claims for longer periods such as those on monthly or two weekly cycles will be able to do so.
  • To be eligible for the grant, employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing.
  • Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period.
  • Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
  • Employers can still make claims in anticipation of an imminent payroll and the first claims can be made from 1 July.
  • For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
  • Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.