The details of the next phase of the Coronavirus Job Retention Scheme (CJRS, also known as furlough) that we were promised by the Chancellor, were published very late on Friday night (12th June.)
Rather than issuing a complete new set of guidelines, they have amended lots of different linked documents and so it is quite a complicated process to go through them all to spot the differences. Unfortunately, there are several typos and some of the explanations are somewhat convoluted, but here are the headlines…
The Coronavirus Job Retention Scheme will close on 31 October 2020.
From 1st 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.
From 1st July, ONLY employees that you have successfully claimed a previous grant for will be eligible for more grants under the scheme (i.e. they were on a PAYE RTI (Real Time Information) submission to HMRC on or before 19th March 2020).
This means the individuals must have previously been furloughed for at least 3 consecutive weeks taking place any time between 1st March and 30th June 2020. For the minimum 3 consecutive week period to be completed by 30 June, the last day an employee could have started furlough for the first time was 10 June.
There is a restriction on the number of employees you can claim for. For qualifying employees, the number of you claim for in any single claim period starting from 1st July cannot exceed the maximum number of employees you claimed for under any claim ending by 30th June. For example, if you have previously submitted three claims between 1st March 2020 and 30th June, in which the total number 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 1st July would be 50. This is except for those coming back from statutory family leave (more about that a little later).
As far as staff agreeing to be furloughed is concerned, the government guidance says, “If you flexibly furlough employees, you’ll need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement.
You will need to:
• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for five years
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working).
You do not need to place all of your employees on furlough, and you can continue to fully furlough employees if you wish. Employees cannot undertake any work for you during time that you record as them being on furlough.”
As far as employees being furloughed between June and July is concerned when the scheme changes, the guidance indicates that in the case where a previously furloughed employee starts a new furlough period before 1st July this furlough period must be for a minimum of 3 consecutive weeks. This is the case regardless of whether the 3 consecutive week minimum period ends before or after 1st July.
For example, a previously furloughed employee can start a new furlough period on 22nd June which would have to continue for at least 3 consecutive weeks ending on or after 12th July. After this the employee can then be flexibly furloughed for any period. However, after 1st July, employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the period up to 30th June.
Although flexible furlough agreements can last any amount of time, unless otherwise specified the period that you claim for must be for a minimum claim period of 7 calendar days. This means that, for example you cannot make 20 claims a month.
More information is given here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
There is however an important exception being brought in to deal with the issue of employees returning from maternity/ paternity/ adoption / shared parental leave or parental bereavement leave who had not previously been furloughed but who are due back in the next few months. Such employees may find that their planned childcare arrangements have fallen through or that their post would have been furloughed if they had been at work since March.
The new guidance allows such employees returning after 10th June to be furloughed you can furlough an employee returning from statutory parental leave after 10th June even if you are furloughing them for the first time. You may do this provided that:
• you have previously submitted a claim for any other employee in your organisation in relation to a furlough period of at least 3 consecutive weeks taking place any time between 1st March 2020 and 30th June
• the employee you wish to furlough for the first time started maternity, shared parental, adoption, paternity and parental bereavement leave before 10th June and has returned from that leave after 10th June
• the employee was on your PAYE payroll on or before 19th March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19th March 2020
When calculating the maximum number of employees, you can claim for, the number of employees you are furloughing for the first time due to them returning from parental leave should be ADDED to any previous maximum.
This means the maximum number of employees you can claim for in these circumstances, is the maximum you claimed for in any one claim before 30 June, plus any employees that you are furloughing for the first time due to them returning from parental leave. But remember that this only applies up to the end of the scheme in October.
From 1st August 2020, the level of grant will be reduced each month until the scheme finishes in October. To be eligible for the grant employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.
The timetable for changes and the phasing out contributions to the scheme was set out in a previous article https://cheringtonhr.com/news/590
. Wage caps will be proportional to the hours 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.
This means that the calculations that you will need to do for payroll and to claim the CJRS grant are fiendishly complicated, but the government have provided a worked example at: https://www.gov.uk/government/publications/find-examples-to-help-you-work-out-80-of-your-employees-wages/example-of-a-full-calculation-for-an-employee-who-is-flexibly-furloughed
So please be patient with your payroll provider as this is going to take extra time to process!
And lastly, if you are contemplating making roles redundant, please note that you cannot claim for the statutory (or company) redundancy payments as part of the furlough submission. Also be aware that you cannot claim any payments in lieu of notice, but you can use furlough periods for people to serve their notice or take annual leave (but remember that you have to top this up to 100% rather than pay them at a lower rate for the duration of this period.) If you need assistance with any of this, please get in touch.