From the 1st of July the new CJRS ‘flexible furlough’ grant scheme starts, which will allow employers to gradually bring their furloughed employees back to work part-time. The new scheme will be in place until the end of October and the government will gradually reduce the amount of grant towards employees’ furlough pay to 70% in September and 60% in October.
The grant paid by the government via HMRC will remain at 80% of the employee’s normal pay for July and August but they will stop reimbursing NICs and pension contributions from 1 August 2020.
Further details on the operation of the new scheme were announced on the 12th of June 2020 which are summarised below.
KEY CONDITIONS FOR NEW FLEXIBLE FURLOUGH
Only those employees who have been furloughed and included in a claim under the original CJRS scheme may be included in a claim for the new flexible furlough. That means they must have been furloughed on or before 10 June to allow a full 21 days prior to the end of the original scheme.
A further restriction is that the maximum number of employees that can be included in a flexible furlough claim cannot exceed the maximum number included in a claim under the original scheme. For example, if the employer has eight employees split into teams of four and furloughed team A for three weeks and then team B for three weeks the maximum number of employees that can be included in a flexible furlough claim will be limited to four.
Unlike the original CJRS furlough scheme there is no minimum furlough period as the intention is to allow employers the flexibility to gradually bring employees back to work. The hours or days worked will need to be agreed between employee and employer which is likely to involve amending the employees’ contracts.
Employees will be entitled to their normal contractual pay for the hours that they work and must be paid at least 80% of their normal pay for the hours that they are furloughed, even when HMRC are only reimbursing 70% or 60%.
Employers will need to notify HMRC of the employee’s usual hours and the hours worked in the claim period. The furloughed hours will be the difference. This will be complicated where the employee’s hours vary. There is currently a lack of clarity in the HMRC guidance on the calculation of ‘usual hours’ and we will of course be available to assist you in making your claim.
Each claim made by an employer must be for a week or more and no claim period can straddle a calendar month end. Like the original furlough scheme claims cannot be made more than 14 days in advance.
The first claims under flexible furlough can be made from 1 July and the deadline for claims under the original CJRS for the period to 30 June is 31 July 2020.
CORRECTING ERRORS IN EARLIER FURLOUGH CLAIMS
You can now tell HMRC about an overclaimed amount as part of your next claim. You will be asked when making your claim whether you need to adjust the amount down to take account of a previous error. Your new claim amount will be reduced to reflect this. You should keep a record of this adjustment for 6 years.
If you have made an error that has resulted in an underclaimed amount, you should contact HMRC to amend your claim. As you are increasing the amount of your claim HMRC will need to conduct additional checks.