Following the announcement of a new flexible furlough scheme by the Chancellor on 1 June 2020, HMRC has now released details of the flexible furlough scheme which starts on 1 July 2020.
Under the flexible furlough scheme, employers can ask employees to undertake work for some of the week and furlough them for the rest. The number of days that an employee will work can be agreed mutually between employer and employee and these requirements can be adjusted to suit the needs of the business.
The guidance can be found here. Whilst the changes are rather lengthy and complicated, you will need to make sure you have read this before making your claim.
A summary of the key changes are:
- You can flexibly furlough anyone who you have furloughed for at least three consecutive weeks between 1 March and 30 June and for whom you have made a successful claim on CJRS
- You can no longer furlough new employees who have not been previously furloughed (the last day to furlough someone for the first time was 10 June)
- The number of employees you can flexibly furlough cannot exceed the maximum number of employees you have claimed for previously (i.e. if in March you furloughed 20 people, April 30 people, May 25 people and June 20 people, then most you can claim for in any one period is 30)
- You must have agreed with the employee that they will be furloughed and have confirmed that agreement in writing (the employee does not have to sign the agreement)
- The minimum period of flexible furlough is now seven days, not three weeks as previously.
- Claims must be split by month. For example, week commencing 29 June, you must split your claim for June and for July.
- You must retain your records for at least six years, not five years as previously.
- You must pay your employee their normal pay for the hours worked and keep full records of all hours undertaken (not necessarily easy if they are working from home). You can then claim the balance of their normal working hours from CJRS at the relevant CJRS rates
- The CJRS rates will reduce: from 1 August employees will still receive 80% but you will have to pay NICs and pension contributions; from 1 September employees will still receive 80% but CJRS will pay 70% and you will pay 10%; from 1 October employees will still receive 80% but CJRS will pay 60% and you will pay 20%. This will apply for all non-worked hours
- The scheme will end on 31 October.
The complexity of the scheme has undoubtedly increased for employers and HMRC has provided several worked examples of claims to help employers navigate scenarios such as part time working, irregular hours, zero-hours contracts etc.
For many employers, now comes the decision-making stage. Restructuring and redundancy may be at the forefront of discussions for some employers, where the implementation of a flexible scheme will help pave the pathway back to normality for others.