Mogers Drewett: Introducing the new Flexible Furlough Scheme
8 min read
On Friday 12 June 2020, several of the government guidance documents were updated to provide further detail on part-furlough. Sean McDonough sets out a checklist of the key points employers need to know about the changes that take effect from the 1 July.
As businesses start to re-open and
restrictions continue to ease from 1 July, employers can bring furloughed
employees back to work for any amount of time and any shift pattern, while
still being able to claim CJRS grant for the hours not worked under the new Flexible
Furlough Scheme (FFS).
Who is eligible?
From 1 July
2020, only those employees that have been furloughed for at least 3 consecutive
weeks between 1 March and 30 June 2020 will be eligible for the FFS. The 10th
June was the last date for an employer to furlough an employee for the first
time, unless an employee is coming back from maternity or paternity leave then there
is some flexibility for employers.
What is the Flexible Furlough Scheme?
new FFS, employees can start to work for some of the week and be furloughed for
the rest. This allows an employer to gradually increase their workforce as business
starts to pick up. There are no minimum or maximum hours that a returning
employee needs to do it is entirely up to what the business needs.
Is the minimum furlough period still
No. The most
significant change is that the minimum 3-week period of furlough has been
removed (as of 1 July 2020). This means that, from 1 July, agreed FFS
arrangements can last any amount of time.
important to note that an employee, who starts a new furlough period before 1
July, must still complete 3 consecutive weeks before being eligible for the new
FFS. Therefore, an employee starting a new furlough period on the 22 June would
need to remain furloughed for 3 consecutive weeks meaning this would end on 12
July 2020. It is only after this, that the employee can be flexibly furloughed
for any period.
How do I set the hours that my
employees will work under the FFS?
need to speak to your employees and confirm the hours of work with them in
writing. There are no minimum or maximum hours that a returning employee needs
to do it is entirely up to what is needed.
claiming for employees who are flexibly furloughed, it is vital that you don’t
claim until you are sure of the exact hours that they will work to ensure you
don’t have to pay some of the grant back to HMRC at a later date.
If I have a written furloughed
agreement in place, do I need to update if I move them to flexible furlough?
Yes. If you
already have a written furlough agreement with your existing furloughed
employees and you move them to flexible furlough, you will need something new
in writing that confirms the latest arrangement. If the hours of work change
from that which you initially agree, you will need a new agreement to reflect
each change. You will need to keep a copy of this agreement and all previous
arrangements for a period of 5 years.
What records do I need to keep?
need to keep records of how many hours your employees work and how many hours
they are furloughed (i.e. not working). You must keep a copy of these records
for 6 years, (one version of the guidance says 5 years) together with a record
of the amount claimed, your claim reference number and your calculations in
case HMRC need more information about your claims in the future.
expected that this grant will be heavily audited in the future and employers
must ensure they have all the necessary documentation to support their claim or
risk having to repay some of the grant at a later date.
Is there any change to the claim
Yes. After 1
July, claim periods must start and end within the same calendar month and must
be for a minimum of 7 days. The crucial point is that you cannot make claims
that cross calendar months and so claims for periods ending on or before 30
June 2020 must be made by 31 July 2020.
exception to the 7 day rule is 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.
time that you can make a claim for days in July is 1 July- you cannot claim for
periods in July before this point.
Is there a limit on the number of
employees I can furlough from 1 July?
number of employees you can claim for in any period starting from 1 July cannot
exceed the maximum number of employees you previously claimed for up until the 30
June 2020. For example, if you
previously submitted 3 claims between 1 March and 30 June 2020, in which the
total number of employees furloughed in each respective claim was 30, 20 and 50
employees, then the maximum number of employees that you can furlough in any
single claim starting on or after 1 July would be 50.
some flexibility surrounding employees returning to work from maternity or
How do I make a claim for those in
From 1 July
you are effectively claiming a pro rata’d amount of 80% of the salary of any
employees you have on FFS. Your claim will be for the proportion of hours not worked out of the employee’s normal
working hours (i.e. their “usual” hours).
There are 2
ways to calculate an employee’s usual hours, depending on whether they have
fixed or variable hours/pay:
For those with fixed hours/pay, take the number of hours worked in the pay period before 19 March 2020.
For those with variable hours/pay, take the higher of :
the average number of hours worked in the tax year 2019 to 2020 or
the corresponding calendar period in the tax year 2019 to 2020.
calculate the usual hours, you should include any hours of leave for which they
were paid their full contracted rate (such as annual leave) and any hours
worked as overtime (but only if the pay for those hours was not discretionary).
Can I still have people on furlough
Yes. You can
continue to fully furlough employees until 31 October 2020 (but from the 1
August a new cost sharing scheme starts). Any employees fully furloughed cannot
undertake any work for you during the time that you record them as being on
Has there been any change to the
holiday rules for furloughed employees?
Employees continue to accrue leave during furlough (whether they are on full
furlough or flexible furlough) and take leave during furlough (so long as you
top the grant up to full pay for any days taken as holiday). You can continue
to restrict when leave can be taken if there is a business need and the correct
notice period is given.
Can I claim for employees who have
TUPE transferred across after 10 June?
Yes. You can
claim under the CJRS in respect of employees of a previous business transferred
after 10 June 2020 as long as
the TUPE or PAYE business succession
rules apply to the change in ownership and
the employees being claimed for have
previously had a claim submitted for them by their prior employer in relation
to a furlough period of at least 3 consecutive weeks taking place between 1
March 2020 and 30 June 2020.
If I get the claim information wrong,
You need to
be careful that the claims you make are correct. HMRC will check claims and
payments may be withheld or need to be paid back if the claim is found to be
either fraudulent or based on incorrect information.
Bill is due to be amended this week (w/c 15 June 2020) to enable HMRC to pursue
employers who break the CJRS rules. It is reported that HMRC is expected to
focus on those employers who have made employees work despite claiming the 80%
furlough payments, didn’t pass on the full furlough payment to staff, or traded
profitably and didn’t need the CJRS payments.
suspects that an employer has broken the CJRS rules, it can impose a 100% tax
rate on the payments. This means that HMRC can prosecute employers which fail
to pay tax demands.
Finance Bill becomes law next month, any employer that received money from the
CJRS will have 30 days to self-declare a mistaken application and pay the money
back without penalty. If HMRC suspect that an undeclared mistake has been made
(after considering filed accounts for the last and current financial years), it
will require those suspected to show they did not break the CJRS payment rules.
A failure to pay back 100% could result in criminal
What happens when the CJRS ends on 31
CJRS ends on 31 October, employers will be liable to cover all associated employment
costs if their employees. Therefore employers must determine, whether they can afford for employees
to return to their normal hours from 1 November and if not, decide if they need
to reduce hours or consider redundancy.
employers don’t have to wait until the end of the CJRS on the 31 October to
make these decisions and can reduce hours or make redundancies at any time. The
updated guidance clarifies that “normal” redundancy rules apply to furloughed
There is a
lot of change at the moment and August will see more change with the introduction
of cost sharing.
Communication at this time is essential and so please, if you have any concerns or need clarification that what you plan to do is correct under the new FFS get in touch. It is better to ensure that you have this correct than risk having to re-pay any of the grant at a later time. Speak to Sean McDonough on 01225 750000 or email firstname.lastname@example.org.