Late last month the Chancellor announced changes to the Coronavirus Job Retention Scheme (furlough scheme) that will come into force from 1 July 2020, giving employers more flexibility to bring back furloughed employees on a part-time basis (the “Flexible Furlough Scheme” (“FlexFS”)).
Further details of the FlexFS were released by HMRC on Friday 12 June 2020 in the form of updates to most of the existing guidance and the issuance of three new pieces of guidance.
On 25 June 2020, HMRC issued its third Treasury Direction setting out the statutory provisions underpinning the FlexFS arrangements.
Here is a summary of some of the key points for employers:
- The changes apply to any employee who has already been furloughed for at least three consecutive weeks at any time during the period between 1 March and 30 June 2020.
- You can bring furloughed employees back to work for any amount of time and any work pattern and claim the furlough grant for hours not worked by those individuals. This means you must work out those employees’ usual working hours and furloughed hours before you can calculate the amount of your furlough grant to claim in respect of them. You continue to be liable to pay the employees in full for the hours they work.
- The total number of employees you can claim for in any claim period cannot exceed the maximum number of employees you claimed for in any claim period up to 30 June 2020. So, if the maximum number of employees you have ever claimed for in a single claim period up to 30 June is 50 employees, you cannot claim for more than 50 employees in any single claim period after 1 July. However, this may differ if you have employees returning from family-related leave, or armed forces reservists returning from called out service (see point 8 below).
- Employees may be furloughed flexibly for any period of time (until 1 July, any employee placed on furlough must have been furloughed for a minimum period of three consecutive weeks). However, subject to certain exceptions, the period that you claim for must be for a minimum of seven calendar days.
- As before, employees cannot undertake any work for you during the time that they are furloughed.
- The new furlough arrangement must be documented (in writing) in a new/amended furlough agreement. You must retain a copy of that agreement until at least 30 June 2025 (i.e. five years). Note that HMRC guidance states that you should retain a copy of all your records in respect of furlough grant claims that you have made (the amount claimed and claim period for each employee, the claim reference number, etc) for six years.
- Employees can enter into a new flexible furlough arrangement more than once (i.e. the arrangement may be changed, or they can return to work and then be furloughed again).
- You can furlough an employee returning from statutory parental leave (i.e. maternity, shared parental, adoption, paternity or parental bereavement leave), or returning army reservists after 10 June 2020 even if you are furloughing them for the first time. This is subject to certain conditions, including that the employee was on your payroll on or before 19 March 2020. Such individuals would not count towards the maximum number of employees you can make a claim for in a single claim period in accordance with point 3 above. They would be in addition to that maximum number.
- The first time you will be able to make claims for days in July will be 1 July. 31 July is the last day you can submit claims for periods ending on/before 30 June 2020.
- A worked example of how to calculate the amount of furlough grant you should claim for an employee who is flexibly furloughed (prepared by HMRC) can be found here.
Another important change to note is that the level of furlough grant that can be claimed will be reduced each month from 1 August 2020 (when employers will become liable to pay employer National Insurance Contributions and pension contributions in respect of furloughed employees).
Further adjustments to the furlough grant will apply in September and October and the scheme will close on 31 October 2020.
Further details and answers to specific practical questions can be found in our updated FAQs for UK Employers.
For specific enquiries regarding furlough, please contact a member of our employment law team.