On 1 July, the second phase of the Government’s Coronavirus Job Retention Scheme (or employee furlough scheme) came into effect.
This new ‘flexible furlough’ scheme is only available to employers who have previously made a claim under the original CJRS, and specifically, only those employees that were furloughed under the original scheme are now eligible to be furloughed , plus those returning from parental or maternity leave. As a reminder to employers – the original furlough scheme ended on 30 June, and therefore any claims for this must be submitted to HMRC by 31 July (more details can be found in our recent blog).
What does this flexible furlough scheme look like?
As part of the scheme’s second phase, employers can continue to furlough employees as they have done under the original scheme or they can start to bring these employees back on a part-time basis. There will be no minimum furlough period for these employees (furlough can be for as little as an hour or even run until the entire scheme ends on 31 October). HMRC’s guidance has stated that employees can be brought back to work for any amount of time or shift pattern, with employers being able to claim a CJRS grant for the hours not worked. Employers will have to pay employees their normal salary rate for any hours that are worked.
In short, the new scheme has been designed to provide employees and employers with the flexibility to adopt a working (or non-working pattern) that makes sense for the business. HMRC’s full guidance on the new scheme can be viewed here.
It has been confirmed that whilst the furlough period for an employee can vary on a daily and weekly basis to suit the business, accurate records must be maintained at all times and these records must be recorded in hours worked.
Salary payments and claiming
From 1 July, furlough claims are based on an employee’s normal / contractual working hours, and so any hours worked by the employee should be paid via the company’s payroll RTI system as normal. The hours not worked will then form part of the employer’s furlough claim.
As part of the new flexible furlough scheme, the claim period no longer extends across a calendar month end, meaning that any furlough claims will need to be submitted for each month from 1 July onwards. Each claim made by an employer must be for a week or more.
The future of the scheme
As outlined in recent announcements, the Government grant will start to be tapered each month starting from 1 August, with wage caps being introduced accordingly.
A timetable for these changes is below:
– In July, the Government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (NICS) and pension contributions for the hours the employee is on furlough.
– In August, the Government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough, whilst employers will pay employer NICs and pension contributions for the hours the employee is on furlough.
– In September, the Government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for the time they are furloughed.
– In October, the Government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for the time they are furloughed.
Despite the Government’s support being reduced via wage caps as per the above timetable, to be eligible to receive the grant, employers must ensure that the furloughed employee is always paid 80% of their salary, up to a cap of £2,500 per month for the time they are being furloughed.
HMRC’s guidance also states that wage caps will be proportional to the hours that an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.
HMRC confirmed that employers are welcome to top up employee wages above the 80% total and £2,500 cap for any hours not worked at their own expense, if they choose to do so. However, HMRC has made clear that throughout the whole scheme, the employer is responsible for paying employees for any hours that are worked.
Get in touch
For further advice or help with preparing and submitting furlough claims, please contact Jonathan Cunningham using the button below.
This information is correct as of 3 July 2020. This blog is for general guidance only. Recipients should not act upon any of the information provided without seeking specific professional advice tailored to your circumstances, requirements or needs. Please contact PM+M before making any decisions based on any matters relating to this blog.