Ramshaw HR

HMRC has released details of the flexible furlough scheme, which starts on 1 July 2020. Under the flexible furlough scheme, employees no longer need to avoid doing any work for the employer but can work for some of the week and be furloughed for the rest, in proportions decided between employee and employer.

The most significant change is that the minimum three-week period for furlough has been removed (as of 1 July 2020). There is no minimum period, although any claim through the CJRS portal must be in respect of a minimum one-week period (i.e. employers can only put in four claims a month, not 31).

Flexible Furlough Scheme

Broadly, from 1 July, employers will claim a pro-rated amount of 80% of salary, based on the proportion of hours not worked out of normal working hours. 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. I have attached one of HMRC’s worked examples here – and would definitely recommend payroll/accountancy assistance with these.

Forthcoming Changes

In summary, the forthcoming changes will be as follows:

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.

More details can be found at https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme

If you would like to discuss this topic in more detail or would like more information, contact Ramshaw HR today.