Flexible Furlough Scheme
HMRC have released details of the flexible furlough scheme, which starts on 1 July 2020. From that date, employees can work for some of the week and be furloughed for the rest.
The way the information was released was by making changes to most of the existing guidance. We have summarised the key changes in each part of the guidance below.
(1) Check if you can claim (now version 14!): https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
If you wish to use the flexible furlough scheme, you will need to keep records of how many hours your employees work and the number of hours they are furloughed.
When claiming you need to be sure of the exact number of hours staff will have worked during the period you are claiming for. You should only claim when you have certainty about the number of hours your staff will be working during the claim period. If you claim in advance and a staff member ends up working for more hours than you have notified the Government about; or, in other words, the staff member is not furloughed for as long as anticipated, then you will end up receiving a higher furlough grant than you are entitled to. You will have to pay some of the grant back to HMRC.
(2) Check which employees you can put on furlough: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Only employees that you have successfully claimed a previous grant for will be eligible for more grants under the scheme. This means they must have previously been furloughed for at least 3 consecutive weeks at any time between 1 March and 30 June 2020.
The only exception to that is if you have a member of staff returning from maternity, paternity, adoption or shared parental leave after 10 June. Those staff can still be furloughed, even if for the first time, provided they were on the payroll on 19 March and you have already furloughed other staff prior to the end of June.
Where a previously furloughed employee starts a new furlough period before 1 July this furlough period must be for a minimum of 3 consecutive weeks. This is the case regardless of whether the 3 consecutive week minimum period ends before or after 1 July. For example, a previously furloughed employee can start a new furlough period on 22 June which would have to continue for at least 3 consecutive weeks ending on or after 12 July. After this the employee can then be flexibly furloughed for any period. However, after 1 July, employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the period up to 30 June.
The number of employees you claim for in any single claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June. For example, if an employer had previously submitted three claims in which the total number employees furloughed in each respective claim was 30, 20 and 50 employees, the maximum number of employees that employer could furlough in any single claim starting on or after 1 July would be 50. However, you can add to that number employees who you wish to furlough for the first time who are returning from maternity, paternity, adoption or shared parental leave.
(3) Steps to take before calculating your claim: https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme
Claims for periods ending on or before 30 June 2020 must be made by 31 July 2020.
There is no maximum length for claim periods that end on or before 30 June. However, claims for any 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 that you want to claim for, even if employees are furloughed continuously. This may mean that your claim periods will differ from the pay periods you use.
From 1 July, there is no minimum period of furlough but any claim through the portal must be for a minimum of a week (ie employers can only put in up to four claims a month, not 31). That is presumably in order to limit the number of claims employers might have otherwise made for very short periods of furlough.
Claim periods starting on or after 1 July must start and end within the same calendar month and must last at least 7 days unless you’re claiming for the first few days or the last few days in a month. You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it.
You should match your claim period to the dates you process your payroll, if you can. You can only make one claim for any period so you must include all your furloughed or flexibly furloughed employees in one claim even if you pay them at different times. If you make more than one claim, your subsequent claim cannot overlap with any other claim that you make. Where employees have been furloughed or flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates.
If your employee is fully furloughed, you do not need to work out their usual and furloughed hours and you should work out the maximum wage amount as usual. An employee is fully furloughed if they do not do any work for you during the claim period.
If your employee is flexibly furloughed, you’ll need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period.
There are two different calculations you can use to work out your employee’s usual hours, depending on whether they work fixed or variable hours. The variable hours method should be used if your employee’s pay normally depends on the number of hours they work, which would include employees who are paid for working overtime. To calculate the normal working hours for those with fixed hours/pay, you simply take the number of hours worked in the pay period before 19 March 2020. To calculate the normal working hours for those with variable pay, you take the higher of (a) the average number of hours worked in the tax year 2019 to 2020 or (b) the corresponding calendar period in the tax year 2019 to 2020. In either case, please see the guidance for the calculations that you need to carry out.
Having worked out the employee’s usual hours, you can then claim for the difference between their usual hours and the actual hours worked, ie. for the number of hours that they were furloughed for.
(4) Calculate how much you should claim: https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme
(5) Claim for your employees’ wages online: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme
(6) Report a payment in PAYE RTI: https://www.gov.uk/guidance/reporting-payments-in-paye-real-time-information-from-the-coronavirus-job-retention-scheme
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