When the Chancellor announced flexible furlough at the end of May we were promised further guidance on 12 June and it has been delivered - in some volume. A policy paper was one of the many documents published on 12 June and this makes it all seem fairly straight forward, but as is often the case, the devil is in the detail and that is set out between eight sets of guidance.
The main employer guidance begins with a reminder that 31 July is the last day that you can submit claims for periods ending on or before 30 June. Put this date in your diary and make sure claims are made in plenty of time. It also confirms that claims for any days in July cannot be made before 1 July.
From 1 July onwards claim periods can no longer overlap calendar months. That does not however mean that the furlough itself cannot overlap months - it is not necessary to end and re-start employee's furlough at each month-end.
As was stated in the original announcement, from 1 July employers can bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for hours not worked. Employers are solely responsible for the payment of hours that the furloughed employees are working. The limitations on an employer's ability to do that are:-
- Only employees that successful claims have been made for previously are eligible for any more grants - it has been clarified that means they must have been furloughed for at least 3 consecutive weeks taking place anytime between 1 March and 30 June 2020. The exception to this is if you have employees who are due to return to work from statutory maternity, shared parental, adoption, paternity or parental bereavement leave ("family leave") after 10 June (the last date an employee could be furloughed and meet the 3 week criteria) or employees who are military reservists returning to work following a period of mobilisation after 10 June; and
- The number of employees you claim for in any single 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 you submitted three claims between 1 March and 30 June for, respectively, 10, 15 and 8 employees then the maximum number you could claim for in a single claim on or after 1 July would be 15. Again, this cap can be affected in circumstances where you have a member of staff returning from family leave or a period of military mobilisation.
Special rules also apply if there has been a TUPE transfer after 10 June. The new employer can still furlough any transferring staff as long as they have been furloughed for at least three weeks between 1 March and 30 June by their previous employer. These employees also add to the post 1 July cap on the maximum number of employees an employer can furlough. Similar rules apply in a limited number of other circumstances including consolidations of group company PAYE schemes.
For details of how the financial support for employers is changing from 1 July see Flexible furlough from 1 July. While employers have the opportunity to flexibly furlough from 1 July, this is simply the earliest available date. Many employers, particularly those who have been rotating furloughed staff, will have employees who have been furloughed (for at least the second time) and the agreed period of furlough doesn't expire until some point in July. Where that pre-existing period of furlough is the current minimum of three weeks the new arrangements cannot begin until that period expires.
The rules regarding what employees can do on the days they are furloughed have not changed.
Administrators can claim for employees who have been furloughed prior to 30 June by their previous employers, but there is no leeway for them to furlough staff that don't meet that criteria. For some reason the guidance for individual employers (who might employ a nanny or similar) has been deleted but it is not clear why. The position for organisations that have staff with roles that are partially funded by public grants has been changed to suggest they seek guidance from their sponsor department or respective administration on their use of the scheme.
If employees are to be flexibly furloughed a new furlough agreement must be entered into and kept for five years. The guidance refers to a written agreement, whereas current arrangements, strictly speaking, require only agreement with a written record of it (so the employee need not provide anything in writing albeit we strongly recommend that any agreement is in writing for current arrangements). This difference may be unintentional and will hopefully be rectified quickly.
The agreement needs to include records of how many hours the employee works and how many they are furloughed (not working). If the working arrangements change over time new agreements will need to be entered into on each occasion. There is however no requirement to flexibly furlough all or any employees - the existing arrangements can continue with employees not undertaking any work.
A brief summary of the rules in relation to holidays while on furlough has also been added to the employer guidance, although nothing that has not already been set out elsewhere is included.
The significant amendment to the Check which employees you can put on furlough to use the CJRS guidance (which originally was part of the employer guidance but was separated from it on 14 May) relates to employees returning from family leave. This provides more detail on furloughing these staff post 1 July even though they do not meet the criteria of having been furloughed for at least 3 weeks prior to 30 June. The employer must have submitted a claim for any other employee in the organisation for a 3 week period between 1 March and 30 June. So an employer cannot furlough an employee returning from family leave if they have not previously used the scheme for others. The employee returning from family leave must also have gone on leave before 10 June, returned after 10 June and meet the usual requirements regarding being on PAYE payroll before 19 March 2020. The maximum number of employees who can be claimed for in any claim period can also be increased to take account of the returner(s). Similar rules apply to military reservists whose mobilisation must have started before 10 June and finished after that date.
The employer guidance confirms that although there is no minimum period for flexible furlough, the minimum claim period is for 7 calendar days. This means an employee could work, for example, for 2 ½ days a week and be furloughed for the other 2 ½ days, however claims can only be made a minimum of every 7 days. The only exception to the 7 day minimum claim period is where a claim straddles the end of one month and the beginning of the next. As claims must start and end in the same month from 1 July onwards if a period of furlough finished on, for example, 3 July, those three days would need to be claimed separately from the days in June.
Undertaking the calculation of a flexible furlough claim is not straight forward and a significant amount of the new guidance addresses this. Steps to take before calculating your claim using the CJRS covers deciding the length of your claim period, what to include when calculating wages, and how to work out your employees' usual hours and furloughed hours.
The calculation requires the employer to calculate a baseline number of usual hours so that can be compared to the actual hours worked, varies depending upon whether previous grants have been claimed on the basis of fixed or variable pay and is further complicated by the need for claims to be contained within the same month. Employers should not claim until they are sure of the exact number of hours an employee will have worked during a claim period, although there is a mechanism for correction of claims.
The next entirely new guidance is Calculate how much you can claim using the CJRS. This document confirms that employers must keep a copy of "all records" for six years, including:-
- the amount claimed and claim period for each employee;
- the claim reference number for your records;
- your calculations in case HMRC need more information about your claim;
- usual hours worked, including any calculations that were required, for employees you flexibly furloughed; and
- actual hours worked for employees you flexibly furloughed.
This guidance then links to the calculator which at the time of writing (13 June) can calculate claims ending on or before 30 June, and starting on or after 1 July but ending on or before 31 July. It also includes guidance on working out the maximum wage amount, 80% of the employee's usual wage, and how much you can claim for employer NICs and pension contributions.
The guidance on how to Claim for wages through the Coronavirus Job Retention Scheme which was first published in April does not seem to have been significantly impacted upon by the recent changes, advice on the practicalities of what is needed to make a claim and what happens afterwards being unaffected. It also provides a link to the Government Gateway to start the claim. Similarly, the guidance on Reporting employees' wages to HMRC when you've claimed through the CJRS is not significantly amended.
Although the Example of how to calculate the amount you should claim for an employee who is flexibly furloughed purports to be updated on the gov.uk website it was published for the first time on 12 June. It sets out the full sequence of calculation steps that an employer must take when claiming through CJRS, based on the common scenario of an employee with fixed monthly salary and working hours who is flexibly furloughed. While it certainly doesn't cover all bases, it is hoped an illustrative example of a full calculation will still assist employers working with other scenarios.
Finally, there is updated guidance on Examples of how to calculate your employees' wages, NICs and pension contributions. This lengthy document links into many of the other guidance documents with numerous examples covering:-
- working out your pay period;
- working out your employee's usual hours and furloughed hours;
- working out 80% of your employee's normal wage;
- how much you can claim for employer NICs; and
- how much you can claim for employer pension contributions.
These documents will certainly give employers plenty to think about as they consider what their workforce will look like going forward. For some flexible furlough and a return to work for all staff will, unfortunately, not be an option.