From 1 July, you can bring back to work employees who have been furloughed before this date for at least three weeks for any amount of time and any shift pattern, while still being able to claim a grant for any normal hours not worked. In other words, you have full flexibility over which hours furloughed staff work.
The first time you will be able to make claims for days in July will be 1 July, you cannot claim for periods in July before this point. 31 July is the last day that you can submit claims for periods ending on or before 30 June.
From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked. From 1 August 2020, the level of grant will be reduced each month. To be eligible for the grant employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.
The timetable for changes to the scheme is set out below. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours:
• There are no changes to grant levels in June.
• For June and July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.
• For August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
• For September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
• For October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.
If you flexibly furlough employees, you’ll need to make sure that you agree this with your employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. You’ll also need to:
• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for five years; and
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working) for six years (you must keep a copy of your records and calculations in relation to your claim to HMRC for six years).
HMRC’s online calculator can only be used for claims ending on or before 30 June. After this date, you will need to work this out. This means that for any employees who you are flexibly furloughing, you’ll need to do a series of calculations to work out what the furlough pay will be for the usual hours that your employee is not working during your claim period.
For example, an employee who would usually work 40 hours per week on a monthly salary of £3,000. If you want them to work half days in July, and a claim is made for the whole month of July, then, if the actual amount worked is 23 half days of four hours = 92 hours, the furloughed hours are 86, i.e. 178 ((40 ÷ 7) x 31) usual hours – 92 actual hours’ worked. Next you will need to calculate the maximum amount you could claim for, i.e. 80% of your employee’s usual wage up to the £2,500 cap for this month (note: you will have to start contributing towards this percentage from 1 September), which here will be £2,400 (80% of £3,000). Multiply this by 86 (furloughed hours) and divide by 178 (usual hours). This gives £1,159.55 as the employee’s furloughed pay for this period. Next you will need to work out how much to claim for employers’ NI and employer pension contribution for this period (note: you will be unable to claim these costs from 1 August onwards). This needs to be applied pro rata and you will need to calculate this again on the employee’s usual hours not worked. See here for this calculation in full: https://www.gov.uk/government/publications/find-examples-to-help-you-work-out-80-of-your-employees-wages/example-of-a-full-calculation-for-an-employee-who-is-flexibly-furloughed
Full details of HMRC’s revised guidance can be found here: https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme
Please contact me if you have any questions.
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