As promised – here is our comprehensive guide on the new flexible furlough arrangements from the 1st July 2020.
- From 1 July 2020, employees on furlough leave will be permitted to carry out work for any amount of time and under any work pattern. This is known as “flexible furlough”. Employers will have to pay their employees for the hours worked but will still be able to claim JRS grants for hours not worked.
- From 1 July 2020, employers may only furlough employees for whom they have already made a valid JRS claim for the period 1 March 2020 to 30 June 2020. In practice, this means employees being furloughed after 1 July 2020 must previously have been furloughed for at least three consecutive weeks commencing on or before 10 June 2020. (These arrangements may differ if the employee is returning from statutory parental leave, see below.)
- There is no obligation to offer flexible furlough (ie. part time work) to any employees after 1 July 2020. Employers may keep employees on full time furlough (subject to the rules of the JRS). Nor is it necessary for employees to actually be on furlough leave as at 30 June 2020 for them to participate in flexible furlough arrangements.
- Throughout the CJRS (including after 1 August 2020), employers must still 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. Employers will continue to able to choose to top up employee wages above this amount for the hours not worked at their own expense if they wish.
- From 1 August 2020, the level of the JRS grants to cover the furlough costs will be reduced each month as follows:
|July 2020||August 2020||September 2020||October 2020|
|HMRC contribution: employer NICs and minimum pension contributions||Yes||No||No||No|
|HMRC contribution: wages||80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875|
|Employer contribution: employer NICs and minimum pension contributions||No||Yes||Yes||Yes|
|Employer contribution: wages||–||–||10% up to £312.50||20% up to £625|
- The guidance states that when placing employees on flexible furlough they must “keep a new written agreement that confirms the new furlough arrangement”. We would always suggest doing so in writing.
- Employers cannot take advantage of the new arrangements until 1 July 2020. In particular, if employees are furloughed before the end of June 2020, they will still need to observe the minimum three week furlough leave period (even if the period of furlough lasts into July 2020).
- After 1 July 2020, employees may be flexibly furloughed for any period, ie. there is no minimum number of weeks or days for a period of furlough leave.
- Periods of “flexible furlough” are subject to broadly the same rules that applied to full-time furlough leave before 30 June 2020, ie. employees cannot carry out any revenue generating work or provide services to or for the employer or any linked or associated organisation. However, employers may take part in training, volunteer for another employer or organisation or work for another employer (if permitted by their contract).
- Where an employee returns from a period of statutory parental leave after 10 June 2020, their employer may furlough them even if they are doing so for the first time. Speak to us if this applies to your Organisation.
- The number of employees an employer can claim for in any single claim period starting from 1 July 2020 cannot exceed the maximum number of employees they claimed for under any claim ending by 30 June 2020. An allowance is made for employees being furloughed for the first time after returning from statutory parental leave after 10 June 2020 (see above).
- From 1 July 2020, claim periods must:
– start and end within the same calendar month (ie. claims cannot straddle two calendar months). This allows for the monthly changes to the HMRC contributions set out above; and
– last at least 7 days, unless the employer is claiming for the first few days or the last few days in a month. Employers can only claim for a period of fewer than 7 days if the period they are claiming for includes either the first or last day of the calendar month, and they have already claimed for the period ending immediately before it.
- Employers should only claim for employees on flexible furlough once they have certainty about the number of hours the employees are working during the claim period. If they claim in advance and then the employee works for more hours than the employer has included in the claim, then the employer will need to repay the appropriate amount to HMRC.
- Employers will have until 31 July 2020 to make any claims for claim periods up to 30 June 2020.
- Employers will be able to make claims for JRS grants covering days in July 2020 from 1 July 2020.
- There is no change to the previous guidance on holiday during furlough leave, meaning we understand that employees may take holiday during flexible furlough, in which case it would need to be paid at the employee’s full rate of pay (rather than any reduced rate agreed during furlough leave).
The main guidance page on the JRS is available here, which links to a number of other guidance pages.
More information to come including some calculation examples to follow.