The beginning of July brings the flexible furlough. In short this is the start of bringing employees back to work by allowing you to keep staff on furlough and just paying them for the hours that they work, so as not to shock the already depleted finances of companies who have been in coronavirus hibernation.
This has been named Coronavirus Job Retention Scheme V2. (V1 ends on 30 June 2020, and you cannot join it now – but you have until 31 July to finish off claiming for June 2020 and before).
Key changes that V2 bring are:
- It is only available to those who have made claims under V1;
- It is only for employees that were furlough under V1, with some exceptions such as employees returning to work after parental leave;
- You cannot claim for more employees than you claimed for under V1;
- Flexible furloughing is allowed – your employees can work for the company, and remain furloughed – I will discuss this more below;
- There is no minimum furlough period (V1 was 3 weeks);
- There is a greater reporting requirement – see below;
- Each claim must be for at least 1 week of furlough (apart from ‘orphaned period’);
- You must claim within each month – the claim cannot bridge a month (e.g. 15 July – 14 August, this is two separate claims made in July (15 July – 31 July) and August (1 August – 14 August));
- We expect 30 November to be the final month for submitting V2 claims.
What is flexible furlough?
V2 allows flexibility in employees working patterns, as agreed by employers and employees, to suit the unknown demand of businesses starting up again. This means that you can ask a staff member to return to work on a part time basis. You will be required to pay 100% for the hours worked, and any contracted ‘usual’ hours unworked are furlough hours that can be claimed through the retention scheme.
It is hard to know what staffing requirements will be in a post lockdown environment, but in order to survive businesses will need to match their resourcing requirement to demand from customers, and also their capacity to service customers.
You can vary the furlough period on a day to day basis, but you must maintain accurate records. HMRC still retain unlimited right to enquiry on any claims made. Employment law still applies, and contracts should be considered when adjusting any working hours.
Employees must be paid in accordance with their contracts, through the payroll. Employers continue to apply for the grant in the same way as V1.
Greater reporting requirements
HMRC are going to ask for more information when making a claim, mostly about the working hours, actual hours etc. HMRC expect you to talk in ‘hours’ not days – which is going to make it hard for those working on day rates etc. You will need to report ‘usual’ hours in calendar days, and actual hours worked. The difference will be the furlough grant amount.
What is an orphaned period, and these ‘split claims’
From 1 July, you will be required to report in at least 7 day blocks within each calendar month. The orphaned period is the number of days at the beginning or end of the month that will not be a complete 7 day block. Its easier with an illustration as below:
E.G July’s Claim:
An employer wishes to make calendar week claims for July. This could be made as five claims:
|Claim period||Number of days in claim|
|1-4 July||4 days||(orphaned period – < 7 days)|
|5–11 July||7 days|
|12-18 July||7 days|
|19-25 July||7 days|
|26-31 July||6 days||(orphaned period – < 7 days)|
Or it could be made in 3 claims:
|Claim period||Number of days in claim|
|1-11 July||11 days|
|12–18 July||7 days|
|19-31 July||13 days|
Or any other variation as long as the period rules are followed (i.e. you cannot have a shorter period than 7 days if it isn’t an orphaned period).
If you are running a calendar month payroll (Pay period of 1 July – 31 July) you can make one claim for the entire month.
Overlapping claims on 1 July 2020
If you have made your claim, you cannot start using V2 (or flexible furlough) until after the end of that claim date. So if your furlough claim was 15 June – 5 July already made, and you have made that claim, employees on that claim are still under the V1 rules – they can come back to work from 6 July.
As with any aspect of CJRS, the employer must keep a written agreement confirming the furlough arrangement. Records of these employee agreements must be kept for until 30 June 2025.
If we can be of any help, or you need a payroll run – please get in contact.