Furlough Leave – The Coronavirus Job Retention Scheme
The Government (HMRC) have refreshed parts of their guidance on the scheme to incorporate the ‘Flexible Furlough Scheme’, which starts on 1st July. Flexible Furlough will allow employees to work part time for you and be paid for those hours, whilst remaining on furlough for the rest of their working week.
We have focused on the parts that are new or updated:
(1) Check if you can claim (now version 14 of their guide!):
You must keep records of how many hours your employees work and the number of hours they are furloughed.
When submitting a claim, you will need to be sure of the exact number of hours staff will have worked during the period you are claiming for. You should only claim when you actually know the number of hours your staff will be working during the claim period. If you claim in advance and the worker ends up working more hours than you have informed HMRC about and they are furloughed for less time, then you will end up receiving a higher furlough grant than you are entitled to. You will therefore have to pay part of the grant back to HMRC.
(2) Check which employees you can put on furlough:
Only employees that you have successfully claimed a previous grant for will be eligible under the scheme. This means they must have previously been furloughed for at least 3 consecutive weeks at any time between 1 March and 30 June 2020. The only exception to that is if you have a member of staff returning from maternity, paternity, adoption or shared parental leave after 10 June. Those staff can still be furloughed, even if for the first time, provided they were on the payroll on 19 March and you have already furloughed other staff prior to the end of June (i.e. if you have made previous CJRS claims). If an employee has been furloughed before and starts a new furlough period before 1 July this furlough period must be for a minimum of 3 consecutive weeks – even if it ends before or after 1 July. For example, a previously furloughed employee can start a new furlough period on 15th June which would have to continue for at least 3 consecutive weeks ending on or after 5th July. After this the employee can then be flexibly furloughed for any period thereafter. However, after 1 July, employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the period up to 30 June. The number of employees you claim for in any single claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June. For example, if an employer had previously submitted three claims in which the total number employees furloughed in each respective claim was 15, 25 and 60 employees, the maximum number of employees that employer could furlough in any single claim starting on or after 1 July would be 60. However, that does not include those that you are adding to furlough for the first time who are returning from maternity, paternity, adoption or shared parental leave – there is no limit on that number. (3) Steps to take before calculating your claim:
Claims for periods ending on or before 30 June 2020 must be made by 31 July 2020. There is no maximum length for claim periods that end on or before 30 June. However, claims for any periods starting before 1 July must end on or before 30 June. This is the case even where an employee furloughed in June continues to be furloughed full time in July. Separate claims will need to be submitted to cover the days in June and the days in July that you want to claim for, even if employees are furloughed for the whole period. This means that your claim periods may differ from the pay periods you use. From 1 July, the 3 week minimum period of furlough has been removed. There is no minimum period but any claim through the portal must be for a minimum of a week (i.e. you can only put in up to four claims a month). Claim periods starting on or after 1 July must start and end within the same calendar month and must last at least 7 days unless you’re claiming for the first few days or the last few days in a month. You can only claim for a period of fewer than 7 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. As you can only make one claim for any period, you must include all your furloughed or flexibly furloughed employees in one claim even if you pay them at different times (say you have a difference in weekly and monthly paid staff). If you make more than one claim, your subsequent claim cannot overlap with any other claim that you make. Where employees have been furloughed or flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates. If your employee is flexibly furloughed, you will have to work out their usual hours and record the actual hours they work as well as their furloughed hours for each claim period. For fully furloughed employees (i.e. no work being carried out at all), you should work out the maximum wage amount as usual. There are two different calculations you can use to work out your employee’s ‘usual’ hours, depending on whether they work fixed or variable hours. The variable hours method should be used if your employee’s pay normally depends on the number of hours they work, which would include employees who are paid for working overtime. To calculate the normal working hours for those with fixed hours/pay, you simply take the number of hours worked in the pay period before 19 March 2020. To calculate the normal working hours for those with variable 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. The guidance sets out the calculations that you should use. Having worked out the employee’s usual hours, you can then claim for the difference between their usual hours and the actual hours worked, ie. for the number of hours that they were furloughed for. (4) Calculate how much you should claim:
https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme This is new and sets out the steps to take for calculating.
This also confirms:
From 1 August, the level of the grant will be slowly reduced. No grant will be available for Class 1 employer NICs or pension contributions from 1 August although these contributions will remain payable by you as the employer. From September 1, you will also be asked to contribute towards the cost of your furloughed employees’ wages to ensure they continue to receive at least 80% of their wages for the time they’re on furlough. (5) Claim for your employees’ wages online:
https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme This has been updated.
(6) Report a payment in PAYE RTI:
https://www.gov.uk/guidance/reporting-payments-in-paye-real-time-information-from-the-coronavirus-job-retention-scheme This has been updated.
(7) New and detailed examples of how to calculate those staff that you will place on flexible furlough: