Coronavirus Job Retention Scheme: flexible furloughing explained

After four months of financial support in the form of the Coronavirus Job Retention Scheme (CJRS), the government is introducing flexible furloughing from 1 July 2020. This will allow employers to bring employees back to work gradually as demand increases and UK businesses start to reopen.

Key Changes:

• The flexible furlough scheme (FFS) is not available for new entrants, e.g. those who were not furloughed for a full three weeks prior to 30 June.
• From 1 July, employers can bring furloughed employees back to work, for hours and shift patterns that suit the needs of their own business, whilst still being able to claim a grant under the CJRS for the employees usual hours that are not worked.
• The wage cap is proportional to the hours an employee is furloughed. For example, if an employee is placed on furlough for 60% of their usual hours, they are entitled to 60% of the £2,500 cap.
• If an employer chooses to flexibly furlough an employee, they must agree these changes with the employee in question (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. The agreement must be consistent with employment, equality and discrimination laws.

Key Dates:

1 July 2020

• the first day that you will be able to make claims for furloughed days in July. You cannot claim for periods in July before this point.
  the minimum three week furlough period will end.

31 July 2020

• the last day that you can submit claims for periods ending on or before 30 June 2020.

From 1 August 2020

• the level of grant will start to decrease and employers will start having to contribute to furloughed worker’s wages.
• From 1 August, employers will be required to pay all employer National Insurance Contributions and make pension contributions. The government will still pay 80% of the employee’s wages for the furloughed hours.
• From 1 September, the government support will reduce from 80% to 70% for furloughed hours, meaning the employer will need to pay for any hours worked, National Insurance Contributions, pension contributions, and 10% of the furloughed hours.
• From 1 October, the government support will further reduce to 60% of the employee for furloughed hours, meaning the employer will need to pay for any hours worked, National Insurance Contributions, pension contributions, and 20% of the furloughed hours.

31 October 2020

• The Coronavirus Job Retention Scheme will close.

Which employees can I claim for under the FFS?

Employers can only claim for those who have already been entered into the scheme, unless a worker has been on maternity, shared parental, paternity or parental bereavement leave and they have or will be returning to work after 10 June 2020.

From 1 July, the number of employees that an employer can claim for cannot exceed the maximum number claimed for in any claim period prior to 30 June 2020. This may cause issues for employers that have furloughed employees on a rotational basis and would like to flexibly furlough all that were part of the rota system.

How long is a claim period?

A claim period is made up of the days that you are claiming a grant for. You can only make one claim within a claims period. If you can, you should match your claim period to the dates you process your payroll.

From 1 July 2020, the minimum claim period will be one week and claim periods must start and end within the same calendar month due to the changes each month to the level of government support available.

How much can I claim for under the CJRS for a flexibly furloughed employee?

Employers can only make a claim for the hours that an employee is furloughed and they must pay for any hours worked by employees.

To calculate how much you can claim under the FSS, you must calculate an employee’s usual working hours, then subtract the hours actually worked during the claim period. This will give the number of furlough hours in the claim period for which you can claim.

Under the FFS, the wage cap is proportional to the hours an employee is furloughed. For example, if an employee is placed on furlough for 60% of their usual hours, they are entitled to 60% of the £2,500 cap.

How do I work out an employees usual hours?

For employees that work fixed hours, usual hours will be the hours they are contracted for at the end of the last pay period ending on or before 19 March 2020.

For employees who work variable hours their usual hours will be the higher of either:

• the average number of hours worked in the tax year 2019 to 2020
• the corresponding calendar period in the tax year 2019 to 2020

In order to make a claim, employers will then need to work out the number of usual hours in the relevant claims period. To work this out:

for employees that work fixed hours:

1. Divide their contracted hours by the number of calendar days in the working pattern, including non-working days. For example, for an employee contracted to 40 hours a week, divide 40 by 7 (days) to work out their daily hours.
2. Multiply their daily hours by the number of calendar days in the pay period (or partial pay period) you are claiming for. For example, for a claim period of the whole of July, you would multiple by 31.
3. Round up to the next whole number if the outcome isn’t a whole number.

for employees who work variable hours using the average number of hours worked in the tax year 2019 to 2020:

1. Start with the number of hours worked (including paid leave) in the tax year 2019 to 2020 before the employee was furloughed, or the end of the tax year if earlier.
2. Divide by the number of calendar days the employee was employed by you in the tax year 2019 to 2020, up until the day before they were furloughed, or the end of the tax year if earlier.
3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
4. Round up to the next whole number if the outcome isn’t a whole number.

for employees who work variable hours based on the corresponding calendar period in the tax year 2019 to 2020:

1. Identify the pay periods in the 2019 to 2020 tax year that correspond to at least one calendar day in the pay period (or partial pay period) you are claiming for.
2. If the pay period (or partial pay period) you are claiming for starts and ends on the same calendar days as the identified pay period in the 2019 to 2020 tax year – use the number of hours they worked in that pay period.
3. If the pay period (or partial pay period) you are claiming for does not start and end on the same calendar days as the identified pay periods in the 2019 to 2020 tax year – you’ll need to add together a proportion of the hours worked in each of the pay periods you’ve identified.

What records do I need to keep?

Firstly, you must have a written agreement of the flexible working arrangement made with the employee and you must keep this on record for five years.

You must also keep a copy of the following records for six years:

• the amount claimed and claim period for each employee
• the claim reference number
• the calculations used to work out claim amounts
• usual hours worked by each flexibly furloughed employee, including any calculations.
• actual hours worked by each flexibly furloughed employee

We will continue to update our blog to reflect any changes to the government support available and will soon release further guidance on the changes to the CJRS from 1 August. If you need advice on the flexible furlough scheme, or any of the other support schemes, contact our team on 01926 422292.