Flexible Furlough – changes to the Job Retention Scheme from 1 July

Following on from our email on the 10^th June, further details for the Job Retention Scheme have been announced to provide information on how the scheme will change from 1 July. This will be the first day from which employers can bring furloughed employees back to work for any amount of time and any work pattern, whilst continuing to claim JRS for the days not worked (flexible furlough).

This update will provide further information on how the part time return will need to be managed and how claims can be made.

For employees that remain on full furlough leave for the month of July, there will be no changes to the process and claim that has been in place for the past few months. Please note that from 1 August, employers will no longer be able to reclaim Employers NI and pension contributions.

Many of our clients have contacted us regarding some further, more specific detail of the scheme and how it will work in practice, therefore please read below if this is applicable. Otherwise, our previous, more simplified email sent on the 10^th provides a more simple overview of the scheme.

Who can be furloughed and for how long?From the 1 July you will only be able to claim for employees that have been included in a JRS grant previously, meaning they must have been furloughed for a minimum of 3 consecutive weeks by 30 June.

From the 1 July it will no longer be required for employees to be placed on furlough for a minimum of 3 weeks, meaning you can agree with employees to be on full or flexible furlough for any period of time. Note, this is only for furlough commencing after 1 July. If a furlough agreement commenced for example, 20 June, this would need to continue for the full 3 week period, even though the end date is after 1 July.

There is no limit to the number of times an employee is placed on flexible furlough.

The number of employees you can claim for in any period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending 30 June, unless this is due to an employee returning from statutory parental leave.

Employers can return some employees to work on a part time basis whilst continuing to have other employees on full furlough.

If you decide to flexibly furlough any employees, you will need to produce a new written agreement that confirms the new furlough arrangement and copies should be kept for 5 years. Records of how many hours your employee works and the number of hours furloughed should be kept for 6 years.

It remains that for the days your employees are on furlough, they cannot be asked to do any work for you.

Changes to the claim period

Claims for periods starting before 1 July must end on or before 30 June. This is the case even where an employee furloughed in June continues to be furloughed full time in July. Separate claims will need to be submitted to cover the days in June and the days in July.

Claim periods starting on or after 1 July must start and end in the same month and must last at least 7 days unless claiming for the first few days or the last few days of the month.

Where a pay period covers the end of June and start of July, two separate claims will be required. For example the weekly pay period for 27 June to 3 July.

• The period 27 to 30 June will need to be claimed on its own or combined with the previous week.
• The 1 to 3 July can be a claim on its own or combined with the following week.

How much grant will we receive?Employers will have to pay the employees in full for the hours they work and 80% for the hours they are furloughed, up to the maximum cap.

Employers can continue to claim for 80% of wages, up to the cap of £2,500, for the hours the employee is on furlough, as well as Employers NI and pension contributions for the hours the employee is on furlough. From 1 August you will not be able to claim for the Employers NI and pension contributions.

The maximum furlough cap of £2,500 is 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.

For employees that have been flexibly furloughed, in order to calculate how much JRS grant will be received, it will be necessary to calculate the employees ‘usual hours’ and from this subtract the number of hours actually worked in the claim period to give you the number of furloughed hours which will be claimed for.

The ‘Usual hours’ are calculated as follows:

• For employees that are not contracted to a fixed number of hours or their pay depends on the number of hours worked. Usual hours will be based on the higher of either:
  • The average number of hours worked in the tax year 2019/2020
  • The corresponding calendar period in the tax year 2019/2020
  • When calculating hours, include any hours of paid leave and any hours of ‘overtime’ but only where the pay for those overtime hours was not discretionary.

• For employees who are contracted for a fixed number of hours they work. Usual hours will be calculated as follows:
  • Start with the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.
  • Divide by the number of calendar days in the repeating work pattern, including non-working days.
  • Multiply by the number of calendar day in the pay period you are claiming for.
  • Round up to the next whole number.

The maximum cap will need to be calculated based on the number of furlough hours and usual hours, where applicable.

Claims by Murrells

We have successfully assisted many of our clients with JRS claims including the claim periods from March to the end of June. The flexible furlough scheme is part of the new measures when the scheme was extended to the end of October.

This is evidently a much more involved process to calculate the amount of usual hours and furlough hours to then be used in the calculation with average rates of pay from the previous tax year, compared to the previous full furlough claim. We will continue to prepare and submit these claims on your behalf under the same agreement as with the first claims. Please continue to keep in contact and update the payroll team (This will likely be either Racheal or Jan who currently prepare your pay roll) with the hours / days worked each month and we will update your payroll records and the JRS claim at the same time.

If you are currently preparing the calculations in addition to filing the return yourself and would like assistance, please do get in touch with us and we would be happy to provide you with a quote.