On Friday, 12 June , HMRC set out further guidance on the Chancellor’s previous announcement of changes he is making to the CJRS from 1 July. His 2 key objectives in doing so were:
- To taper the financial support available towards the scheme’s closure date of 31 October 2020.
- To provide for ‘part-time’ furloughing from 1 July so that employees can be brought back from furlough on a gradual basis.
The ‘old’ scheme will close on 30 June and the new flexible scheme will open on 1 July 2020.
From 1 July, you can agree with previously furloughed employees to work any amount of hours for any period of duration, and still claim a grant from the CJRS for the proportion of normal working hours where they are still not working and on furlough.
By 31 July, all claims for the period to 30 June will need to have been made as normal.
New claim periods and other arrangements start for new furlough periods from 1 July and require close attention.
You must update your furlough agreements with your employees to reflect the changes to come.
Claim amounts remain unchanged for June and July but the Government will be requiring an increasing contribution from employers from 1 August.
ACTIONS REQUIRED BY EMPLOYERS:
Plan for how you will use the option for part time furlough from 1 July and make necessary adjustments to your furlough agreements with furloughed employees.
Work out how you are going to manage your claims periods going forward and that you can collect all of the required data on working and furlough hours from 1 July.
Consider the cost implications from 1 August and factor that into your financial forecasts for the coming months.
Seek advice in the event you anticipate needing to make permanent changes to your working arrangements or headcount going forward.
KEY QUESTIONS RELATING TO UPDATED GOVERNMENT GUIDANCE ISSUED ON 12th June 2020
The Government have issued the guidance relating to the changes to the scheme and the claim process from 1 July and we have provided clarification on key questions below.
This is not an alternative taking bespoke advice that considers the specifics of your circumstances and your employment contracts and we would always advise that you take appropriate advice before acting.
What are the key changes to the scheme from 1st July?
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 the CJRS grant for the hours not worked.
It is confirmed that anyone for whom a successful CJRS grant claim has been made in the past will be eligible for the new scheme. This means they must have completed at least a minimum 3-week furlough period between 1 March and 30 June 2020. They do not need to be on furlough on 30 June.
From 1 July, the number of employees you can include in a claim cannot exceed the maximum number you claimed for under any claim ending by 30 June 2020 (with the exceptions outlined in points 4 and 5 below).
The wage cap of £2,500 will apply proportionately to the hours an employee is furloughed.
Employees who are shielding, or unable to work due to caring responsibilities, or sick whilst on furlough continue to be eligible for furlough, provided they have appeared on a claim for a minimum 3-week period prior to 30 June.
Are there changes to the minimum furlough periods?
Whereas the minimum furlough period to 30 June was 3 weeks, from 1 July the flexible furlough period can last any amount of time.
Employees can agree to flexible furlough periods more than once.
If a previously furloughed employee starts a new period of furlough before 1 July, it must be for a minimum 3 weeks even if it ends after 1 July. After this, they can be flexibly furloughed for any period.
Note however that after 1 July, you cannot generally make claims that cross calendar months (see next section).
What are the keys dates and changes to claim periods that I need to be aware of?
Any claims for the period from 1 July cannot be made prior to that date.
Claims for any periods ending on or before 30 June must be made by 31 July. Note that a furlough period under the current scheme (minimum 3-week period) could straddle 30 June / 1 July but the claim must be split so that the proportion up to 30 June is claimed separately.
Provided they have previously completed a minimum 3-week furlough period, you can still re-furlough someone after 10 June and make a claim for the period provided that their 3 consecutive weeks is completed in July. They cannot however use the flexible scheme until the min 3 weeks is complete.
From 1 July, claim periods 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. Consider the costs of making claims and plan accordingly to keep the costs to a minimum.
Claim dates should match payroll dates wherever possible. You can only make 1 claim per period, so it needs to include all furloughed & flexible furloughed employees even if you pay them at different times.
What data do I need to keep?
To make claims under the flexible scheme you will need details of the number of usual hours your employee would work in the claim period, the number of hours they have/will worked and the number of furloughed hours to be claimed in that period.
You should be certain of the hours being worked under the flexible furlough scheme before you make a claim. Under or over claims can be rectified but will be complicated and time consuming – much better to get it right first time.
Detailed guidance on the calculation of flexible furlough claims is now on the Government website :
Am I able to furlough employees returning from statutory parental leave (maternity, paternity, adoption, shared parental or parental bereavement leave)?
Claims made for all periods of
These employees can be furloughed after June 10 even if it is for the first time, provided that:
- You have previously submitted an eligible claim for any other employee/s in your organisation between 1 March and 30 June, and
- The employee started their statutory leave before 10 June and returned after 10 June, and
- The employee was on your payroll on or before 19 March 2020 and appeared on an RTI submission on or by that date.
Employees being furloughed in these circumstances can be claimed for in addition to the maximum set out above.
Am I able to furlough employees that have transferred under TUPE and on a change of ownership?
It has been possible for the new employer to claim for employees transferred after 28 February 2020. Claims from 1 July can continue subject to the minimum prior furlough rules stated above.
Claims can also be made for employees transferred after 10 June 2020 provided that:
- TUPE or PAYE business succession rules apply.
- The employees included have previously been furloughed by their prior employer for a minimum of 3 consecutive weeks between 1 March and 30 June 2020.
In this case, the maximum number that can appear on a claim from 1 July can be the maximum number previously claimed by the employer in any one claim prior to 30 June, PLUS the number of employees transferred for whom an eligible claim was made by the prior employer – provided that number does not exceed the prior employer’s maximum cap.
The process of claiming for employees that have been transferred under TUPE is not currently possible through the portal and can be very time-consuming. Where practical, delaying the merger of payrolls until after the furlough claim period ends may be more cost effective than trying to claim for transferred employees.
How much do employers need to contribute from 1st August?
To remain eligible, employers must continue to pay furloughed employees at least 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed, despite the reducing grant levels. Wage caps are proportional to the hours the employee is furloughed.
Grant changes over forthcoming months are as follows. This is based on full time furlough – the wage cap of £2,500 will apply proportionately to the hours the employee is furloughed.
Employers must pay employees for hours worked.
Employers can continue to top up wages above the minimum furlough pay amounts.
Do I need to update the furlough agreements that I have in place?
Furlough agreements will need to be updated to account for the extension of the scheme (where necessary, depending upon your original agreement wording) and for those where flexible furloughing is going to apply and working hours are going to change.
Whilst agreements do not need to signed, they should be discussed with employees and a written record kept for 6 years.
You must keep a record of how many hours your employees work and how many hours they are furloughed (and therefore not working).
Can employees take holiday whilst on furlough, and can I claim for this?
The guidance on taking holiday during furlough is currently unchanged, so it appears possible to continue claiming the 80% grant from the government to cover most of the cost of holidays during furlough. We will be keeping a close eye on this aspect of the guidance though.