Please note this article is up to date as of 10 am on Monday 15 June 2020 and therefore does not consider changes or developments following that date and time.
On Friday evening (12 June 2020) the Government made updates to its numerous pages of guidance on how flexible furlough will operate.
Unfortunately, the Government did not release a new page of guidance covering flexible furlough but instead updated a number pages of its existing guidance. This inevitably makes fully understanding the new scheme more tricky. Employers considering flexible furlough should read the following links to the Government’s guidance:
- Check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme
- Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme
- Steps to take before calculating your claim using the Coronavirus Job Retention Scheme
- Calculate how much you can claim using the Coronavirus Job Retention Scheme
- Claim for wages through the Coronavirus Job Retention Scheme
- Reporting employees’ wages to HMRC when you’ve claimed through the Coronavirus Job Retention Scheme
Having reviewed the changes and developments, my key observations of the flexible furlough scheme are:
- It comes into effect as of 1 July 2020.
- There will be no minimum periods so no need for flexible furlough to be in place for at least 3 weeks.
- It still only applies to employees employed on or before 19 March 2020.
- Employers will pay employees at 100% rate for the days/hours worked and then make a claim through the Coronavirus Job Retention Scheme (CJRS) for the days/hours not worked.
- As the amounts covered under the CJRS will change in July, August, September and October claims can only be made in respect of a single month. Where claims straddle two months separate claims are necessary.
- Claims to the CJRS should only be made once it is clear how many hours/days will be claimed under the CJRS. This is to avoid any issues over excessive claims being made and money needing to be paid back.
- Employers need to be careful that employees do not work during the periods they are on furlough. Employers should ensure that employees do not work longer than agreed and do not answer emails or client calls during the hours or days when they should be on furlough. It is possible that employees could inadvertently end up doing work when they should not be. It is a worthwhile reminder that the Government specifically states that the following should not be done by an employee whilst on furlough:
- Any activity that generates income for the employer; and/or
- Any service for the employer or linked to or associated with the employer.
It is possible to see situations where an employer falls foul of this, causing HMRC investigations and repayments.
The Government has provided a worked example on how to calculate a claim under the CJRS for employees with set hours which employers should read and work through.
For employees with variable hours the calculation is based on the higher of either (1) the average number of hours worked in the tax year 2019 to 2020 or (2) the corresponding calendar period in the tax year 2019 to 2020.
Finally, the Government guidance states that a new written agreement needs to be in place regarding flexible furlough. As such, it does not (certainly at the date of writing this article) appear that a variation can be made to existing furlough agreements but a new agreement needs to be in place.
One initial observation I have is that the agreement will need to have some flexibility regarding the hours to be worked to allow for increases or decreases in hours worked between now and 31 October 2020. It will also be crucial for employers who propose to use flexible furlough to have clear and accurate records on the days and hours an employee works as I imagine HMRC will scrutinise claims against such information.
As the guidance on CJRS changed numerous times, I would not be surprised if the guidance on flexible furlough changes and therefore I would recommend that employers keep a close eye on the guidance to ensure they are following the correct version.
If you would like to discuss anything raised in this article and/or require assistance, please do not hesitate to contact Rob Zacal on 01752 513549 or firstname.lastname@example.org