Coronavirus Job Retention Scheme – Flexible Furlough from 1 July

Category: Amber AccountingCOVID-19Payroll - Posted On: Jun 18 2020

As announced on Friday 29 May, flexible furlough, allowing furloughed employees to come back to work part time, will begin from 1 July.

HMRC issued in-depth guidance on how the scheme will change from July and we’ve highlighted the main points you need to be aware of in order to make claims moving forward.

As the scheme closes to new entrants on 30 June, only employees who have been furloughed for at least 3 consecutive weeks between 1 March and 30 June will be eligible for further grants under the scheme. This may differ if you have an employee returning from statutory parental leave.

When to make a claim

It’s important to note that you will only be able to make claims for days in July on 1 July, not before this point. Also, for claims ending on or before 30 June, the last day these can be submitted is 31 July.

Due to the rules of the scheme changing each month, employers cannot make claims that cross calendar months. This means that claim periods starting on or after 1 July must start and end within the same calendar month.

For claims falling between months, such as June/July, two separate claims will need to be submitted with those up to 30 June needing to be submitted before any July claims. Claim periods cannot overlap, so you will need to make sure you include all of the employees you want to claim for in each claim you make.

Please make sure you make claims in the correct time frame to avoid missing out on vital funds.

Using flexible furloughing – claim period

From 1 July, employers can bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.

To flexibly furlough employees, you must agree the terms with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. Agreed arrangements can last any length of time and employees can be entered into an agreement more than once.

However, the period that you claim for must be for a minimum claim period of 7 calendar days. You can only claim for less if it includes the first or last day of the calendar month and you’ve already claimed for the period ending immediately before it.

Please note – the number of employees you can claim for in any claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June 2020. This may differ where you have an employee returning from statutory parental leave.

Calculating a flexible furlough claim

If you have agreed a flexible furlough arrangement with an employee, you must work out your employee’s usual and furloughed hours before you can start calculating your claim.

When claiming for employees who are flexibly furloughed you should not claim until you are sure of the exact number of hours they will have worked during the claim period. If you claim in advance and your employee works for more hours than you have told us about, then you will have to pay some of the grant back to HMRC. If you make an error in your claim, you can find out how to correct it here.

You will need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period. HMRC has provided detailed guidance on how to calculate the hours worked and hours on furlough here.

Please be aware that for any hours worked, at least National Minimum Wage rates must be paid to employees, and an employer must pay taxes and pension contributions as they normally would.

Once you know the hours you need to claim for each employee on furlough, you can proceed to make a claim. If you need help with calculating the amount to claim for, HMRC have created a calculator to help – you can find this here.

If we submit your claims on your behalf, our team will be able to calculate this for you but require a note of hours usually worked and hours on furlough of each employee prior to submitting your claim.

Required Record Keeping

You must keep a copy of all records for 6 years, including:

  • the amount claimed and claim period for each employee
  • the claim reference number for your records
  • your calculations in case HMRC need more information about your claim
  • usual hours worked, including any calculations that were required, for employees you flexibly furloughed
  • actual hours worked for employees you flexibly furloughed

Upcoming changes to the amount you can claim for

With further changes coming into force from 1 August onwards, we’ve created a table which shows how claims will be affected from July onwards. We will issue further guidance on calculating claims from August in due course.

Government contribution to wages 80% up to £2,50080% up to £2,50070% up to £2,187.5060% up to £1,875
Government pays ER NICs & pensionYesNoNoNo
Employer contribution to wages 0010% up to £312.5020% up to £625
Employer pays ER NICs & pensionNoYesYesYes
Employee receives 80% up to £2,50080% up to £2,50080% up to £2,50080% up to £2,500

Useful Resources

HRMC has issued full guidance on each of the steps you need to take to make a claim, you can read more here.

ACAS have put together some letter templates for extending and ending furlough, you can download them here.

For more information or for help with calculations or submitting your claims, please get in touch with your usual Amber contact, email or call 01382 312140.