Update to the Flexible Furlough Scheme

Claire Vane
June 17, 2020

Can Michael McIntyre predict the future?

Despite the seriousness of the lockdown and the incredible social, political and economic consequences for us all, there is undoubtedly a proliferation of people’s creative streaks and I’m sure many of us are being very selective about which jokes we send to whom.

Of all the things I have watched, Michael McIntyre made me smile the most, with his post hoc prediction of the future:

To rather more serious things, on Friday evening, the HMRC released the details we have been expecting on the new FFS (Flexible Furlough Scheme). This means that employees can do some work for their employer and can be furloughed for the rest of the time in whatever ways are decided between the employees and the employer, and there are some fundamental things you need to know. It is unfortunate that the guidelines are given in a number of different documents and this could be something of a nightmare for small businesses but there are a number of sources of useful information.

The most important fact is that the three week period for furloughing has been removed as of the 1st July 2020, although claims through the portal must be in respect of a minimum of a one week period so that in effect, employers can put in as many claims as they want as long as it is a minimum of 7 days, a maximum of a calendar month and within a calendar month - claims cannot from 1st July cross calendar months (unlike previously). From 1st July, individuals can be furloughed for any period of time and make a claim from the CJRS for any hours not worked. This will apply only to those who have been furloughed at some point between 1st March and 30th June. There is also a limit on the number of people for whom you can claim furlough funding in any one claim period, and this is limited to the maximum number of people you furloughed for any one claim period prior to the end of June.

The 31st July 2020 is the last date you can submit claims for periods ending on or before 30th June 2020. On 1st August, employers will be required to start contributions to the cost of furloughing by paying all employer national insurance contributions and pension contributions. On the 1st September, the HMRC will provide only 70% of wages, up to a cap of £2,187.50 for those hours spent on furlough. The employer is still required at this point to pay national insurance and pension contributions and to top up wages to 80% of salaries to a cap of £2500 for those who are on furlough. On 1st October 2020, this 70% of wages drops to 60% and the cap drops to £1,975.00 and the scheme closes at the end of October. Again, furloughed employees must always get at least 80% of salary up to a cap of £2,500, no matter what the furlough funding level is.

If employers are calculating the number of normal working hours for those with fixed hours of pay, the employer should simply use the number of hours worked in the pay period before the 19th March 2020. To calculate normal working hours for those with variable pay, the employer should take the higher of the average number of hours worked in the tax year 2019-20 and the corresponding calendar period in the tax year 2019-20. If employees take holiday during this period this must continue to be calculated at the normal salary level and not the furloughed level (whilst this has not changed from previous advice, it will impact on the flexible furlough calculations).

The time making these claims may be somewhat longer than expected as each date brings in a different requirement but the important change to remember is the three-week minimum period for furloughing is removed from 1st July.  In addition, detailed records of the claims, for example calculation of working hours, calculation of furlough hours, allocation decisions on working vs. furlough, payment calculations and claim references, must be prepared and kept for 6 years.

Please note that although it is now too late to put somebody on furlough for the first time, as Wednesday 10th June was the deadline, nonetheless the scheme does not close until the 31st October 2020.

HOWEVER, if you are a parent returning to work after statutory maternity or paternity leave, you remain eligible for furlough even if you are being furloughed for the first time AFTER the cut-off deadline. Further information on this can be found at the Government website.

There is plenty of guidance to be found on the gov.uk website in full and if your business is such that you need to consider more radical action and organisational re-design and will need help with restructuring, then please do get in touch.

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Claire Vane

Claire is the Managing Director and Founder of Integrated Resources. She is passionate about releasing potential in individuals and organisations.

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