This piece sets out some further details regarding the changes made by the Government to the Coronavirus Job Retention Scheme (CJRS) which take effect on 1 July 2020.
Under the original scheme that ends on 30 June 2020, employees who have been "furloughed" cannot be required to work during furlough. From 1 July 2020, the scheme will be amended to permit furloughed employees to return to work on a part-time or flexible basis. They will be paid in full for the time worked and the employer will be able to continue to claim from the CJRS in respect of the time they are not working. The scheme will remain open until 31 October 2020 but with a requirement for the employer to contribute to furlough costs from 1 August 2020.
Government Guidance Links
Changes to the CJRS are summarised below but we would advise you to consider the detail available at the following links:
- Steps to take before calculating your claim using the Coronavirus Job Retention Scheme
- Calculate how much you can claim using the Coronavirus Job Retention Scheme
- Examples of how to calculate the amount you should claim for an employee who is flexibly furloughed
- Examples of how to calculate your employees’ wages, National Insurance contributions and pension contributions
- Guidance: Check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme
- Guidance: Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme
- Guidance: Check if your employer can use the Coronavirus Job Retention Scheme
- Guidance: Claim for wages through the Coronavirus Job Retention Scheme
- Guidance: Reporting employees’ wages to HMRC when you’ve claimed through the Coronavirus Job Retention Scheme
- Coronavirus Job Retention Scheme calculator
- Claim for your employees’ wages through the Coronavirus Job Retention Scheme (CJRS): A step by step guide for employers
What are the changes from 1 July 2020?
From 1 July 2020, furloughed employees will be able to return to work on a part-time or flexible basis. Employers will pay in full for days worked and can claim under the CJRS for days not worked, subject to the relevant caps. The key ways in which the scheme will change from 1 July are as follows:
- Only employees who were on furlough on or before 10 June 2020 will be eligible (unless they were on statutory family leave or a military reservist on a period of mobilisation on 10 June)
- There will not be any limit or restrictions on the working patterns/ shifts of furloughed employees.
- Employees will not need to be furloughed for a minimum of three weeks so rotations on and off furlough can be made on a much more frequent basis.
- The new working arrangement must be agreed in writing – the existing furlough agreement will not be sufficient
- Claim periods must be a minimum of a week and claim periods will no longer be able to overlap months
- Employers will need to report both hours worked and the usual hours an employee would be expected to work in any claim period
- The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim
How will the CJRS change from 1 August 2020?
From 1 August 2020, employers will be required to contribute towards furloughed employees' 80% (subject to cap) furlough pay as follows:
- From 1 August 2020 employers will be required to pay the employer National Insurance and employer pension contributions on the furlough pay
- From 1 September 2020 employers will also be required to pay 10% of employees’ pay, capped at £312.50. The government will pay 70% of employees’ pay, capped at £2,187.50
- From 1 October 2020 employers will be required to pay 20% of employees’ pay, capped at £625. The government will pay 60% of employees’ pay, capped at £1,875
As furloughed employees can return to work on a part-time basis from 1 July 2020, the new caps will be proportional to the hours not actually worked.
Employers will need to enter into new 'flexible furlough agreements' with employees, if their furlough period continues after 1 July 2020?
If an employer wishes a furloughed employee to begin to work part-time after 1 July 2020, a new agreement will need to be implemented. As employees were barred from working for their employer whilst on furlough leave in the period up to 30 June 2020, their furlough agreement should have stated that they should carry out no work during furlough. This will clearly need to be altered to allow for work to be done. In any event, it appears that agreement in writing is required in order to claim in respect of flexible furlough from 1 July 2020.
This means that, where the employer wishes a currently furloughed employee to begin to work part-time or flexibly after 1 July 2020, it will be necessary either for the existing furlough agreement to be amended by a signed side letter or for a fresh furlough agreement to be entered into, which permits work and sets out when the employer can require employees to come to work.
We are in the process of producing a new flexible furlough agreement precedent, as well as an amendment side-letter for existing furlough agreements currently in place, and hope these will be available by Friday 26 June 2020.
Can an employer furlough additional employees from 1 July 2020?
No, unless they have been on statutory family leave, they are a military reservist on a period of mobilisation or unless they are inherited through a TUPE transfer in some circumstances.
On 29 May 2020, the government announced that the CJRS will close to new entrants from 30 June 2020. This means that employees must have been furloughed for the first time by no later than 10 June 2020 in order that they are furloughed for the minimum three weeks required under the rules of the scheme to 30 June 2020.
It is not necessary that an employee is on furlough leave immediately prior to 1 July 2020, provided they have been validly furloughed (for a minimum three week period) prior to that. This means that an employer can re-furlough employees who were subject to a rotating furlough arrangement prior to the introduction of the new scheme.
Claim Periods from 1 July 2020
The preparatory steps guidance sets out the following restrictions on the claim periods an employer can choose from 1 July 2020:
- Claim periods must not overlap months, meaning that a claim period must start and end within the same calendar month. It also means that employers will need to submit a claim for the period up to and including 30 June 2020 and their next claim for the period from 1 July 2020 onwards
- There will be a minimum claim period of seven days, unless the employer is claiming for the first few days or last few days in a month.
Is there a limit on the number of employees who can be furloughed in a claim period?
From 1 July 2020, the number of employees claimed for in a single claim period starting from 1 July cannot exceed the maximum number of employees the employer claimed for under any claim ending by 30 June. The guidance gives the following example:
"For example, an employer had previously submitted three claims between 1 March 2020 and 30 June, in which the total number employees furloughed in each respective claim was 30, 20 and 50 employees. Then the maximum number of employees that employer could furlough in any single claim starting on or after 1 July would be 50."
What records should an employer keep in relation to employees on furlough?
The following records should be kept for six years:
- The amount claimed and claim period for each employee
- The claim reference number for your records
- The calculations used in case HMRC need more information about the claim
- For employees who are flexibly furloughed: the normal hours worked pre-furlough and the actual hours worked
- Copies of furlough letters/ agreements for each individual
Implementing new furlough arrangements from 1 July 2020
After flexible furlough is introduced on 1 July 2020, employers have a number of choices available, namely they may want to:
- Require employees currently furloughed to begin to work part-time as permitted under the rules of the scheme applicable at that time
- Continue to furlough employees without requiring them to work part-time
- Furlough employees currently working who had previously been furloughed for at least three weeks before 30 June 2020
- Introduce or continue a rotating furlough arrangement from 1 July 2020
What steps must employers take to put furloughed employees on flexible furlough?
Where employees are currently furloughed and the employer wishes to implement flexible furlough by requiring them to work part-time, the employer will need to:
- Decide which employees to designate for flexible furlough
- Notify employees selected for a part-time return to work of the intended change
- Consider whether it needs to consult with employee representatives or trade unions
- Agree the change with the employees. This will include agreement as to whether the employees will work on a fixed part-time pattern, or whether their hours are subject to flexibility at the employer’s discretion
- Confirm the new arrangement in writing
- Submit claims to HMRC in accordance with the new rules on claim periods
- Keep records and calculations in respect of their claims, including records of the amount claimed for each furloughed employee and the period for which they are furloughed
Can an employer continue to fully furlough employees from 1 July 2020?
It appears that employers are permitted to keep employees fully on furlough, provided that no work is carried out for the employer by the employees.
Continuing or introducing a rotating furlough arrangement from 1 July 2020
Employers may wish to continue or introduce a rotating furlough arrangement after 1 July 2020 e.g. alternating employees between working their usual hours whilst not on furlough and working part-time whilst furloughed. It appears that employers will be able to continue to rotate furlough between their employees from 1 July 2020, as long as those employees have been furloughed for at least three weeks before 30 June 2020.
There is no requirement that employees are furloughed for a minimum three week period from 1 July 2020, but any period of furlough that commenced before 30 June 2020 must be for a minimum three week period, even if this extends beyond 1 July (see "Using minimum furlough periods" in Employers' CJRS guidance).
How much work will a furloughed employee be entitled to do from 1 July 2020?
On the basis of the current information, it appears that there will be no minimum or maximum limits on the work that an employee can carry out during furlough. The Employers' CJRS guidance states that employers can bring employees back "for any amount of time and any shift pattern" while still being able to claim for their normal hours not worked.
We hope the above is of assistance. If you have any questions regarding the CJRS at this stage, including the information above, please do not hesitate to contact James Johnson, Head of Employment, on 01332 225225.